Category: Compliance

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Compliance

Staying Vigilant on Compliance

Karen Klees, Certified Consumer Credit Compliance Professional, EFG Companies

 

Contributing Author: Karen Klees, Certified Consumer Credit Compliance Professional, EFG Companies

The auto industry won a small victory over the Consumer Financial Protection Bureau (CFPB) in November when the House passed the Reforming CFPB Indirect Auto Financing Guidance Act. In its current form, this piece of legislation directs the CFPB to amend how it issues guidance to indirect auto lenders by:

  • Providing a public notice and comment period before issuing the guidance in final form;
  • Making publicly available all information relied on by the CFPB, while also redacting any information exempt from disclosure under the Freedom of Information Act;
  • Consulting with the Board of Governors of the Federal Reserve System, the Federal Trade Commission, and the Department of Justice; and,
  • Studying the costs and impacts of the guidance to consumers, as well as women-owned and minority-owned small businesses.
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Are You Prepared for Expanding CFPB Influence?

Karen Klees, Certified Consumer Credit Compliance Professional, EFG Companies

 

Contributing Author: Karen Klees, Certified Consumer Credit Compliance Professional, EFG Companies

For the past few months, the Consumer Financial Protection Bureau (CFPB) has made headlines with the implementation of their Larger Participant Rule. Now that more lenders are feeling the pressure, dealers can expect the shadow of the CFPB to creep over their operations, starting with documentation.

If you haven’t implemented a version of the National Auto Dealer Association’s (NADA) Fair Credit Compliance Guidelines, now is the time to do so. Expect to have banks, captives, finance companies, etc. asking for your written policies and procedures, as well as documented training, within the next few months as they prepare for CFPB investigations.

The CFPB initially preferred the establishment of a flat rate that does not change from one customer to the next, resulting in a flat fee or a fixed percentage of the amount financed for dealership compensation. However, in their recent settlement with Honda, they allowed for NADA’s guidelines to be implemented.

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The Supreme Court Upholds Disparate Impact. Now What?

Contributing Author: John Stephens

 

Contributing Author: John Stephens, Senior Vice President, Dealer Services, EFG Companies

Last month was a big month for the CFPB. The Supreme Court of the United States held in the case of Texas Department of Housing and Community Affairs et al. v. Inclusive Communities Project, Inc., that “disparate-impact claims are cognizable under the Fair Housing Act.” The CFPB established their Larger Participant Rule, putting captive finance companies under their jurisdiction. And, BB&T announced the launch of a nondiscretionary dealer compensation program that prohibits dealer markup and offers a flat-fee dealer compensation program.

Right now, you can’t read the news without seeing an article about the CFPB and speculation on what the industry will look like in the coming months. Rumors abound that three captives currently under CFPB investigation, Honda, Nissan and Toyota, will cap dealer markup.

Just recently, Honda Finance Corporation reached a resolution with the Consumer Financial Protection Bureau (CFPB) and the Department of Justice (DOJ), where it agreed to change its pricing and compensation system to “substantially reduce dealer discretion and minimize the risks of discrimination,” and to pay $24 million in restitution to affected minority borrowers. While the jury is still out on Nissan and Toyota, lenders have a unique opportunity to take advantage of all this activity.

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