Industry Reps, Consumer Advocates Debate Fair Lending at CFPB Auto Forum
Disparate impact and dealer compensation were at the crux of the debate at yesterday’s Consumer Financial Protection Bureau forum on auto finance.
CFPB Director Richard Cordray kicked off the event, reiterating that lenders must police their dealers to ensure compliance with fair lending regulations.
Industry representatives called out regulators for using unproven proxy methodology to determine biased lending, and argued that the shift to a flat-fee dealer compensation structure would still result in discretionary lending practices. Ultimately, “eliminating dealer discretion would do more harm than good,” argued Damon Lester, president of the National Association of Minority Automobile Dealers. Consumer advocates volleyed back with concerns about consumers being overcharged for loans and for lack of transparency on how dealers are being compensated.
In the final session, a pair of CFPB officials noted that a flat-fee structure is just one possible solution for alternate compensation methods.
