CFPB’s ‘Larger Participant’ Rule Coming This Summer, Sources Say

The Consumer Financial Protection Bureau appears as though it will finally make live its auto finance rule for larger market participants this summer, sources tell Auto Finance News.

The compliance industry sources told us that the rule is on track for release at some point this summer, with one source naming August as the expected delivery date.

The larger-participant rule is one of the most eagerly awaited by the industry. The CFPB accepted comments on the proposed rule through Dec. 8, 2014. The proposed rule was made public on Sept. 14, 2014.

The rule would allow the CFPB to supervise nonbank auto finance companies that “make, acquire, or refinance” 10,000 or more loans or leases in a year. The CFPB said it would supervise the nonbank companies “to ensure they are complying with federal consumer financial law.” The CFPB estimated last September that about 38 auto finance companies would be subject to this new oversight, and that those companies originate around 90% of nonbank auto loans and leases in the nation and in 2013 provided financing to approximately 6.8 million consumers.

The larger-participant rule will be among the most hotly discussed topics at the upcoming Auto Finance Risk & Compliance Summit, May 18-19 in San Diego.

Smaller auto finance companies have objected to the proposed larger-participant rule, as has Harley-Davidson Financial Services. Last week, the CFPB released an annual report on its 2014 activities, and made it clear that auto finance remains a high-priority market for enforcement. The annual report made prominent mention that the larger-participant rule was under consideration, and while the CFPB also noted that “the Bureau currently has authority to bring enforcement actions against nonbank auto lenders,” it did not indicate a formal date for the rule’s implementation.