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.