The Consumer Financial Protection Bureau is shifting its examination focus to how auto lenders transact, said Calvin Hagins, the bureau’s deputy assistant director for originations.
“We started doing deeper examinations,” he said during a panel discussion at the 2017 Auto Finance Risk & Compliance Summit last month. “Last year, I said we were going to start conducting exams to look at compliance management [in order to] to get an understanding — we’ve been doing that. Now we’ve moved to the realm of looking at transactions.”
Specifically, that means looking for compliance with the Truth in Lending Act (TILA), examining advertising and marketing practices, as well as the “prevalence or existence of” unfair, deceptive, or abusive acts, and practices (UDAPs), he said.
“In the context of an examination, we go in with eyes wide open — meaning if we see something, we say something,” Hagins said. “We’ll have discussions with personnel about business practices, and regulatory compliance, and depending on what those responses are, that might take us down a different path. So we go in looking and listening to find out what’s happening in the auto space.”
He also highlighted that the bureau’s intent is “not to dictate to the industry how to conduct the business but to understand how you conduct the business and then apply that against the applicable consumer protection laws,” he said.
In addition to upping examinations of transactions, the CFPB will be more vigilant in investigating fraud, Hagins added.
Although there is also an ongoing appellate court case that could change the structure of the CFPB, most lenders are holding steady to their compliance strategy, Auto Finance News previously reported.
Hear more from Hagins about CFPB exams in the video below, the second in a six-part video series from the 2017 Auto Finance Risk & Compliance Summit held last month in San Diego:
