Contributing Author: Karen Klees, Certified Consumer Credit Compliance Professional, EFG Companies
2015 is here and the CFPB is keeping up the pressure on compliance regulation. Everyone is wondering what the year will look like. Will more lenders implement flat rates? Will the CFPB find a way to extend their influence into the F&I space? Will Congress step in and impose restrictions on the CFPB? With so much up in the air, dealerships and lenders alike are waiting with baited breath to see what 2015 has in store.
Instead of waiting, it’s time to focus on and hone your operations. While many dealers have already begun decreasing their reliance on finance reserve and pushing for more product sales, you can bet that the CFPB is looking into how to branch into that area. In fact, in 2014, the CFPB reached a consent agreement with an F&I vendor and a lender, where each entity was required to issue reimbursements to contract holders for using ambiguous language in the product sales process, such as “This product will only add a few dollars to your monthly payment.” The CFPB stipulated that the exact price of the product is necessary in the product presentation, not generalities.
While the CFPB’s influence lies primarily with the lending community, they have been clear that lenders are also responsible for the actions of the vendors and partners with whom they choose to do business. This applies to who they use to service and collect their loans, as well as who originates them. So far, they have focused for the most part on rate administration as it relates to origination, but as we saw in 2014, they also took issue with the sales practices of ancillary products. To protect your dealership and keep operations running smoothly, take a deep look at your F&I product presentation with your legal team and address any issues that may arise.