DALLAS — Lenders have battened down the hatches when it comes to vendor management, in the wake of Wells Fargo Auto’s insurance scandals. Even lenders that don’t issue forced-placed insurance — the product at the heart of Wells Fargo’s $1 billion fine — have made changes.
“A couple of areas popped up, such as we could do better in our testing program and vendor oversight,” said Veronica Roman, chief compliance officer at Toyota Financial Services, at the Auto Finance Performance and Compliance Summit earlier this month. “We have a sound vendor-oversight program in the business, but I added some staffing and added some testing into the program.”
While few vendors are operating in a way that would cause concern, Wells Fargo’s woes have served as a wakeup call for lenders.
“You have controls, you have escalation paths, you stack the right talent against the framework, and you have routines where things are going to be escalated to leadership meetings and have conversations about what you’re seeing,” Roman said. “You have to have triggers where you do not use certain vendors after certain thresholds are met — or not met.”
Wells Fargo’s scandal also entangled its collection department, and lenders are reacting to that, as well. For instance, Veros Credit LLC has changed its collection associates’ incentives, said Mark Medrano, director of compliance and training development.
“We disincentivized, to a certain degree, without discouraging,” he said. “If you don’t want high turnover, be careful with how you disincentivize, because you’ll have a mass walkout.”
Instead, Veros has implemented certain “triggers” that disincentivize associates from acting inappropriately and ensure they are staying focused on compliance, he added.
