With new presidential administrations come new overhauls to federal bureaus. Following a two-year hiring freeze and a 17% drop in employment under the Trump administration, the Consumer Financial Protection Bureau launched an aggressive campaign to increase personnel.
And with a larger enforcement team, dealers can expect greater oversight and possibly more significant penalties and fines.
The Consumer Financial Protection Bureau is a regulation agency within the Federal Reserve System which tracks unfair lending practices. And some organizations are already bracing themselves for the increased scrutiny they may face under a Biden-appointed director.
How the CFPB is Rebuilding
While Biden’s pick for director of the CFPB, Rohit Chopra, awaits Senate confirmation, acting director Dave Uejio has already enacted several changes to the bureau. Ueijo has put out the call for “attorneys at all experience levels” to apply for jobs within the CFPB.
“We must hold accountable companies that break the law and harm American consumers and small businesses during this time of incredible financial stress,” Ueijo states on the official CFPB website. To achieve this goal, the CFPB is actively seeking out a diversity of attorneys from the Hispanic Bar Association and the National Asian Pacific American Bar Association, among other entities.
An Increased Focus on Discrimination
A large part of President Biden’s platform focuses on reducing racial disparity in the financial sector. While campaigning, Biden promised to create a public credit reporting and scoring division within the CFPB. If enacted, this will involve implementing algorithms that would factor in rental history and utility bills when establishing consumer credit. The administration also seeks to empower the CFBP against lenders who don’t provide affordable payment plans.
These changes can be seen as a response to the financial hardship many Americans have faced in the wake of COVID-19. The pandemic has resulted in higher unemployment numbers across the country, and the lack of regular stimulus packages has left consumers hurting. Particularly for those in minority communities.
NADA Recommends Making Compliance a Top Priority
In a recent Automotive News article, members of the National Automobile Dealers Association are beginning to grapple with new pressures from a beefed-up bureau. In response to increased scrutiny over practices such as auto lending discrimination, NADA recommends its members make compliance programs a top priority in their F&I departments.
In February of 2016, under the Obama administration, the CFPB ordered Toyota Motors to pay out $21,900,000 in restitution to thousands of African-American and Asian, and Pacific Islander borrowers. The CFBP found that these consumers were paying higher interest rates on their vehicles than their white counterparts.
How Dealers Can Respond
The best thing that dealers can do to avoid unwanted attention from the CFPB is to invest time and attention into your F&I compliance processes. This requires an emphasis on internal policies and procedures and implementing proper training and guidelines for employees.
A well-planned, well-implemented, and well-maintained F&I compliance program not only prevents regulatory violations but also protects consumers and shields your organization from the risks of litigation.
Tighten Up Your F&I Compliance
Without a workable F&I compliance program, your organization may suffer damages related to revenue, operational focus, and brand reputation. From helping you develop compliant sales processes, training sales and finance teams, and safeguarding consumer information, KPA’s F&I compliance solutions are here to help you every step of the way.