The Connecticut Department of Banking settled a case with Santander Consumer USA this week for $3 million, alleging the lender failed to properly calculate the balance owed on repossessed vehicles and improperly charged consumers convenience fees.
This is another settlement in a long line of regulatory actions taken against Santander before the company changed its management.
“The agreement resolves an investigation of issues dating back [to 2016], and we are pleased to put this matter behind us,” a spokeswoman told Auto Finance News. “Santander Consumer made major strides in the last year … and today’s announcement demonstrates our commitment to resolving legacy issues under Chief Executive Scott Powell and the new leadership team.”
Some of those “strides” she outlined include passing a capital stress test and the termination of a 2014 agreement with the Federal Reserve Bank of Boston, which hampered the lender’s ability to pay dividends.
However, the Department of Banking alleges that the improper convenience fees continued until Jan. 19, 2017. Santander has made changes to its repossession process and has already delivered payments to the 3,730 Connecticut borrowers affected, a spokesman for the Department of Banking told AFN.
“I am happy thousands of Connecticut consumers have seen relief,” Banking Commissioner Jorge Pérez said in a statement. “It is critical that we maintain our vigilance with a watchful eye so we can minimize risks to our consumers.”
In November 2017, reports surfaced that the Consumer Financial Protection Bureau was preparing to sue the auto lender, however, as acting director Mick Mulvaney took the reigns of the regulator, no action has been taken. Santander declined to comment on whether the investigation was still open.
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