The Consumer Financial Protection Bureau is shifting its dealer participation enforcement to private settlements, rather than public consent orders, in a sign that the bureau is backing off this topic, said Chris Willis, partner at Ballard Spahr LLP.
“The CFPB seems to be reorienting itself to try to deal with this issue through confidential supervisory MOUs (memorandums of understanding), which are like settlement agreements in the context of an exam, but they are non-public, so you won’t see more of them,” Willis said during a presentation at the 2017 Auto Finance Risk & Compliance Summit last month.
Furthermore, it is unlikely lenders will go through dealer pricing structural changes, such as flat fees or other pricing models oriented around previous consent orders, he said. It is more likely arrangements between dealers and lenders will look like the “monitoring and compensation” models.
“Those entities that are the subject of these discussions with the CFPB probably feel — and I believe accurately so — that the leverage situation has changed significantly on this issue since a year ago,” Willis said. “I think the terms on those agreements are going to reflect a greater leverage on the industry side than previously existed. The dealer finance charge issue is there, it’s just going to be a bit quieter and a little less risky.”
Hear more from Willis about the CFPB in the video below, the fourth in a six-part video series from the 2017 Auto Finance Risk & Compliance Summit held last month in San Diego:
