Top of mind at the conference was the CFPB’s recent targeting of the auto finance industry, including guidance the bureau issued in March regarding dealer participation programs offered by auto finance sources. In his opening remarks, Jack Tracey, executive director of the association, attempted to keep audience members focused on getting answers rather than using Hackett’s presentation to air their grievances.
“We are here to talk about the realities we’re facing and what we need to do in order to comply,” he said.
Hackett told audience members there is “an integrated effort across the bureau to apply different talent and tools to auto finance.” He also confirmed that supervisory investigations of auto finance sources are underway, adding that the CFPB is most interested in exploring the effect of dealer mark ups on protected classes.
“We don’t think discretionary pricing is per se illegal,” Hackett said. “It creates a measurable risk of discrimination.”
Attendees received additional input on the topic from Hudson Cook LLP Partner Jean Noonan, who presented on fair lending. “You heard Rick [Hackett] say that discretionary pricing is not per se illegal. But this comes just as close as the agency can possibly come to saying, ‘But we think there's a significant risk that it will be illegal as applied.’”
In an overview of the CFPB’s investigations, Michael Benoit, a partner with Hudson Cook LLP and F&I and Showroom magazine’s Legal columnist, urged finance sources to create clear policies and train staff. Documentation, Benoit said, will be key.
“Doing it right is a good thing, but it’s not enough anymore,” said Benoit. “The CFPB wants documentation as a road map.”
Mark Edleman, who presented along with Benoit, added: “The CFPB has gotten a lot better at focusing their CIDs [Civil Investigative Demand] and asking specifically for the things they want.”
This sentiment was echoed during the conference’s service provider panel, which focused on how to prepare for the CFPB’s audits. The panel included representatives from Allied Solutions, Dealertrack, and Santander Consumer USA, among others.
Compliance will continue to be a hot topic for the NAF, as the trade group will soon offer online compliance education to its members. Steve Hall, a board member for the association, offered a different way to view compliance.
“We’re emerging out of one of the greatest recessions our country’s ever had, and this has created a stigma around financial institutions,” he said. “I think what that does, especially when you get into the deeper credit spectrum and you start talking about nonprime and subprime, there’s this stigma that this is a bunch of predators that actually make a lot of money by holding consumers down.
“As we look at this as an association, we believe we’ve got to do a better job of changing that perception.”
— Brittany-Marie Swanson