Compliance management systems encapsulate every departmental sector within an auto finance institution, but they also affect the way auto finance firms integrate into different markets, both in terms of oversight compliance and more localized geographic regulatory standards.
Attendees at the Auto Finance Compliance Risk & Compliance Summit got a sneak peak of what’s coming in terms of future compliance strategy, and learned about ways to stem possible violations from Jonna Boyle, NewOak’s Director.
“The first step is to review each process and identify the applicable regulatory requirements. For example, every state has different lien release time-frames, so a blanket policy to release liens in 20 days for all states isn’t sufficient,” she said. “The release process needs to satisfy all possible state laws.”
The CMS should cover everything from the obvious (and less fun) oversight and exams, to tracking and reporting information, to developing policies that consistently reduce the likelihood of regulatory crackdowns.
However, over-compliance could also mean problems for lenders. “Policies that include regulatory requirements that aren’t applicable to your operations can be just as damaging,” Boyle said. “Especially if you aren’t executing on those written policies.” Unnecessary policies can paint lenders into a corner, so Boyle warns lenders to be cautious before drafting policies based on templates or documentation used in a past life. “Get guidance from a firm or consultant that knows your business and which rules apply to it,” she advises.
Boyle also spoke of how a compliance department ought to be nested within a company, without becoming too involved in the operational decisions of other departments. A successful compliance department requires a high degree of autonomy, she said.
“Compliance personnel should remain objective and avoid being influenced by peers in other departments. Everyone in an organization is striving to meet objectives to ensure success, and senior management should view the independent compliance function as an integral part of achieving that success.”5 - Readers Like This Post