A lender’s risk assessment, conducted prior to an exam by the Consumer Financial Protection Bureau, is viewed as a “positive” thing by the bureau, according to Calvin Hagins, deputy assistant director for originations at the CFPB.
Furthermore, that internal assessment — along with the CFPB’s own consumer complaint data — will be taken into account when the bureau comes knocking, Hagins said during the 2016 Auto Finance Summit, “because you’re in the business of managing risk, so to the extent that you do a risk assessment, we will leverage on that, to help us better scope the examination.”
The CFPB views consumer complaints in the auto originations market in two ways: To look for overall trends in the industry and how that relates to originations, as well as complaints about specific companies, Hagins said. The regulatory agency then pairs its data with a lender’s own complaints, to determine if there is “some overlap.”
“Those risk areas are factored into the examination, but it’s not about those specific issues – it’s about those issues in the context of determining compliance with federal financial consumer laws,” Hagins said. “So it’s not that I’m [only] looking at this, this, and this. I’m looking at everything, but I am looking out for A, B, and C.”
There are a few controls in place, to ensure consistency in the CFPB’s exam process, he added, including Hagins himself. “The control point for consistency, is me. I read them [exam reports] all,” he said. “It happens for mortgages, auto, student [loans], and credit cards. Every report, I’ve read it.”
Hear more from Hagins about CFPB regulatory exams in the video below — the second in a special video series sponsored by White Clarke Group: