The Consumer Financial Protection Bureau determined that the overall compliance management systems of automobile loan origination for the lenders it recently examined were “strong for its size, risk profile, and operational complexity,” the bureau said in its Fall Supervisory Highlights.
“These institutions effectively identified inherent risks to consumers and managed consumer compliance responsibilities,” the CFPB wrote. “These entities also showed strength in their oversight programs for service providers. In particular, they defined processes that outlined the steps to assess due diligence information, and their oversight programs varied commensurate with the risk and complexity of the processes or services provided by the relevant service providers.”
Despite improvements at a number of other entities, the CFPB further wrote, examiners found that the overall CMS at one or more entities “remained weak.”
The lender’s weaknesses included failure to: create and implement consumer compliance-related policies and procedures; develop and implement compliance training; perform adequate root cause analysis of consumer complaints to address underlying issues identified through complaints; and adequately oversee service providers, according to the CFPB.
Also, the board of directors and management failed to demonstrate clear expectations about compliance or have an adequate compliance audit program, among other issues.
The relevant financial institutions have undertaken remedial and corrective actions regarding these weaknesses, which are under review by the bureau.
The bureau’s rule defining larger participants in the auto loan market went into effect in August 2015. The consequence was that the CFPB now has supervisory authority over auto lending, not only by the largest banks but also by various other large financial companies.
However, specifically which lender, or how many, the bureau has examined as of yet is “confidential supervision information that we do not disclose,” a CFPB spokeswoman previously told AFN.
To read the CFPB’s full findings, click here.
