The long-awaited Larger Participants rule is expected to take effect Aug. 31 at the Consumer Financial Protection Bureau, for nonbanks that originate a combined 10,000 auto loans or leases per year.
Captives lead that list. The definition covers 34 lenders, with 90% of total nonbank auto outstandings, the CFPB said.
The CFPB already had jurisdiction over banks and credit unions with more than $10 billion in assets. State examiners have been in charge of examining nonbanks.
Even without examining authority, the CFPB has had enforcement authority over nonbanks.
For instance, American Honda Finance Corp. reached a consent order in July with the CFPB and the U.S. Department of Justice, where the captive finance company accepted lower ceilings on dealer markup on loans, and agreed to establish a $24 million fund that will be used to compensate customers identified by the CFPB and the DOJ.
The CFPB said in a statement there was no civil penalty in the consent order in part because Honda cooperated with the bureau’s investigation. In addition, the consent order allows Honda Finance to pay dealers both a lower amount of dealer markup and a “non-discretionary” fee, which outside legal experts interpreted to mean a flat fee.
In turn, Honda Finance said in a statement it accepted the consent order but the captive denied tolerating discrimination and said it had a “difference of opinion” with the CFPB over the bureau’s statistical methods.
