Keep On Keeping On

The Consumer Financial Protection Bureau (CFPB) has not come out unscathed in the wake of the Wells Fargo scandal. While some say the CFPB’s enforcement action demonstrates a need to strengthen the agency, others use the scandal as a case study to demonstrate the bureau’s inept and over-reaching practices. What’s behind the controversy surrounding the CFPB on this case? The L.A. Times broke the story of Wells Fargo deceptive practices in 2013, yet it just recently got the attention of the CFPB. Regulators are now asking the CFPB to account for this lapse.

In the background of all this, the Senate is scheduled to vote on legislation that could curb the CFPB’s independence. While both dealers and lenders avidly await that decision, it’s important to remember that the legislation does not dismantle with the bureau. And, with everything still up in the air, the best practice to undertake is to keep on overhauling your own compliance practices.

Regardless of any legislative changes, compliance will continue to be in the spotlight in the coming years. Whether the CFPB functions under more strict parameters or continues to have free reign over lending practices, we can expect them to continue to work to expand their influence.

That being said, by now, most lenders should have a fairly robust CFPB compliance program in place. This is great. Keep it up. Don’t let your compliance initiatives slack while the CFPB is under the microscope. In addition, as each announcement of lender settlements comes about, it’s always a good idea to compare your compliance program with the one making the news to learn from their investigation and apply those learnings to your processes.

Of course, all lenders involved in auto finance recognize that the CFPB is treading closer, regulating the retail automotive space through their institutions. With recent developments of the Federal Trade Commission clamping down on deceptive dealership practices, we can expect heavier emphasis across the board for both lenders and dealers. For this reason, it’s more important than ever to foster a collaborative compliance platform for your dealer partners. Ask yourself:

• How am I involving dealers in my compliance initiatives?
• Do they feel involved, or do they feel like I represent the hammer the CFPB is metaphorically using to shove compliance down their throats?

The last thing any lender should want is a combative relationship with their business partners. For this reason, I highly suggest that lenders get out and have proactive discussions with dealers around how they can work together. Just as your team needed compliance training, so do dealers. Help put them in touch with compliance training courses that will better enable dealers to maintain compliance and profitability.

The more you work with your dealers during this time to keep your relationships strong and create a more compliant atmosphere overall, the better off you will be when dealership compliance takes a front row seat. In addition, if you help dealers address the paradox of profitable compliance, how much more likely do you think it will be for them to consider you a top lender for their business?

With almost 40 years of experience helping dealers maintain compliance with a myriad of local, state, and federal regulations, EFG Companies knows how to bridge the compliance divide. Contact us today to get ahead of the pending compliance storm.