Auto finance regulatory examinations in 2017 are expected to be “more in depth,” in terms of the types and scope of reviews, as the Consumer Financial Protection Bureau moves into a “more routine approach” to exams, said Calvin Hagins, deputy assistant director for originations at the Consumer Financial Protection Bureau.
The CFPB is taking its learnings and interactions from exams over the past year into consideration for an updated the exam manual and procedures related to auto originations and servicing, he told attendees at the 2016 Auto Finance Summit. “It’s really an opportunity for us to learn and put some of the lessons learned from the prior 12 months into practice for a much better and more efficient exam process,” Hagins said.
The CFPB wants the examination process to be an “open dialog,” he said, and not an exercise of how regulators can go about finding things that the lender may or may not want to share. “What I tell my exam force is to ask more questions than speak, because what we’ve learned is if someone has been doing [in the auto finance industry] for 20 or 25 years, the chances of me finding something or understanding the nature of business is probably not going to be on the same level.”
The exam process is an opportunity for examiners to learn the nature of the business, as opposed to trying to inform the entity of how to conduct their business, he added.
Additionally, examiners are asked to complete regular “check-ins” with the institution’s management team throughout the process to discuss any findings and preliminary conclusions, Hagins said, so there really shouldn’t be any surprises about the results of the exam.
Hear more from Hagins about CFPB regulatory exams in the video below — the first in a special video series sponsored by White Clarke Group:
