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Compliance

Staying Vigilant on Compliance

Karen Klees, Certified Consumer Credit Compliance Professional

 

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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Enterprise Financial News – Volume 8

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Categories
Compliance F&I

Prepared for F&I Product Compliance?

Steve Roennau Blog Headshot

With the Consumer Financial Protection Bureau (CFPB) quickly ramping up its influence over auto-finance, it is widely expected that F&I products will be the next area of scrutiny. As a lender, there are a few ways to proactively prepare your institution for this next step in CFPB regulation.

The first, and most obvious step is to set limits on how much you’ll fund for the sale of F&I products. Be aware, however, that as the CFPB is reducing the dealer profit from rate markup, dealers will be looking to maximize profit from F&I product sales. They will be looking for lenders who are competitive with their funding options. Look at your entire compensation plan to ensure that it not only promotes consistent pricing, but also fairly and competitively compensates the dealer for the business.

As with all of the vendors that a lender uses, the CFPB is likely to require lenders to vet all product administrators. Savvy lenders are reviewing the contracts to get a better view into the product administrator’s practices, and their customer service standards.

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