Regulatory Compliance Update

Alerts on new rules and guidance Lessons in proactive regulatory compliance Staffing and training dos and don'ts Dealer marketing and management [toggle title="TRANSCRIPT"] 00:00And the panel for a great session. While the next panel makes its way up here 00:07 wanted to remind everyone that the cocktail reception starts at at 515 we're going to have the game on so you can enjoy that hope you'll all be there with us for the for the reception, which will be next door. I also wanted to urge all of you to visit power sports finance comm we just recently redesigned it it's a it's a really beautiful site and easy to use. You can sign up for alerts at power sports finance, calm and and so I hope you'll do that. And now it's my pleasure to turn it back over to Natalie so 00:53 oh, maybe not now. There we go. 00:58 Okay, great. Ready? 01:01 All right. 01:04 Maybe Wait a second. 01:11 Hold on. 01:11 Sorry. 01:14 Okay, I think you're ready. 01:16 Good afternoon, everybody. I'm at once again. I'm Natalie madula, deputy editor powersports finance. Thank you all for joining us for our last panel discussion of the day, entitled regulatory compliance update. I know you're all excited for the cocktail hour, but this is going to be a really great session, so stick with us. And as a reminder, you can submit questions by visiting slider comm using the code 3533. So the Consumer Financial Protection Bureau dominated much of the headlines in the financial services space this year with the new forced arbitration rule and even more recently proposed rule on vehicle title lending. Additionally, federal regulators continue to reach numerous consent orders and level fines against various law lenders. There are also many large investigations still under scrutiny. And, you know, Wells Fargo dealer services, for example is still under investigation for fourth place auto insurance. However, well regulatory intention has been mostly focused on auto finance, obviously powersports is not immune to scrutiny. So joining us on the panel today to discuss this new alerts and rules and guidance, as well as lessons are Molly Calkins, partner of the Consumer Financial Services practice group at acre Minh, and David Kimberly partner at niessen. Elliott, so thank you both for joining us. And please join me in welcoming to the stage. So as with any pain, I want to start with introductions. So Molyneux can start with you let us know a little more about you and your practice. 02:48 Thanks, Natalie. Thanks for inviting me to join this panel. And thanks to all the sponsors this event, it's very nice. 02:57 I am a partner at 02:58 Ackerman The Washington DC office where I deal with federal regulators on behalf of our, our auto lending and powersports finance lending clients. Previously, I was doing enforcement work at the CFPB and the FDIC. And now, I, I assist lenders with compliance department setup and process and exam prep exam responses, regulatory investigations, and in any enforcement actions that arise. 03:41 My name is David Kimberly. I'm a partner in the auto finance group at Nissan and Elliot. In our practice, we set up companies starting from licensing organization, operating agreements, and also setting up servicing platforms all the way through to repossession notices and procedures and We'll also assist clients with setting up private label programs and other transactional agreements. 04:07 Thank you. And so I want to start with vehicle title ending any proposed rule from the CFPB, since that's the most timely. So maybe Molly, if we can start with you think give us a little bit more background on this proposed rule, and to what effect it could have on our sports. 04:22 Sure, the title lending rule just just enacted last month, states that for any consumer loan is less for 40 less than 45 days duration. And that might be a payday loan might be a title loan, or otherwise, the lender is obligated to ensure that the borrower has the ability to repay, they have to do some due diligence on that front. And that's quite a change from past practices where in the past if if a consumer shows up With a with a vehicle title that that lender would make the loan. So now they've got this additional legal requirement to check the ability to repay, that might provide a bit of protection to auto and powersports lenders who have made longer term loans with the vehicle as collateral, because now their loan is going to show up in a credit report as it has but now, the short term lender has to check that and we'll see that and if that borrower is burdened with alone, or the vehicle is burdened with a lien, that the borrower's obligated to repay, that could affect whether the short term lender makes the loan, there might be fewer title loans made and that means that That your collateral isn't as likely to be mapped by one of those short term title lenders. 06:09 David, was there anything you want to add to that? 06:11 Sure. I would say that the ability pulled that Oh yeah, perfect the ability to pay that is better. It's a new focus and a growing focus not only at the CFPB level, but in your more active Northeastern Attorney General's such as Delaware, and Massachusetts with the large consent orders against Santander in connection with their Chrysler capital program, in which they essentially had internal markers of dealer potential dealer wrongdoing, such as when they call customers to verify income, they would outright state something completely different on the credit applications. So the onus is now on the lender to verify that they're getting good information from their dealers, and to audit those for whom there is are signals such as early high early payment, defaults or excessive Excessive loan to value, beyond, you know, beyond internal controls to then go back to those dealers with some sort of, you know, the worst case scenario was cut off, which can have happen but at least to go focus in and do something with your signals that you're getting from the dealer network. 07:21 I want to shift gears to the arbitration role. So, which I believe the CFE made a rule last month. So correct me if I'm wrong on that. When does this rule officially take effect? And what should the nurse do in the meantime to prepare, I mean, volume can start with you. 07:36 And like just shifting gears, phrasing there, because the CFPB is arbitration role has has been going fast and slow going all out. And now it's slowed down a bit by some, by some circumstances. It was scheduled to have already taken effect, but Congress decided to review it under the current National Review Act. And that's that's a federal statute under which they could repeal it. And they could block its enactment. The House of Representatives already passed that resolution. And now it's with the Senate. The Senate Banking Committee is trying to move it forward. The difficulty is that they don't have all senators on board. And so it's it's, it could go up for vote in the Senate as early as this week. But it's likely they're going to wait a bit until all our more senators are on board. There's also a federal lawsuit that was filed by a number of banking associations and the US Chamber of Commerce. And just a couple of days ago, they filed a motion, they filed for an injunction to stop the rule from being implemented. So depending on what that court does, will affect whether companies are required to start adhering to this new arbitration rule. And the rule itself that the arbitration rule, as we're referring to it is that Consumer Contracts can no longer mandate arbitration. They can suggest that any disputes arising under a lending contract or credit card contract, go to arbitration. But that clause would not be enforceable. And, and the arbitration rule also mandates certain language, go into those contracts, alerting consumers to the non enforceability of those clauses. 09:50 And, David, I want to ask you follow up on that too. So, we'll interrupt lenders need to act quickly to remove these clauses from contracts or if there's anything else you want to add to As well, 10:01 sure, so the the date to mark on your calendar would be right now, March 19 2018. And that's the date when the clauses my referred to would need to go into effect. And what you essentially would need to do is say, if you are a provider, meaning you're not the dealer but you're the destiny, then your arbitration agreement can only be individual arbitration, you can no longer waive class actions. So you'll have to consider in the interim, whether that is still a value to you to only do individual arbitration once you lose that class action. Defense, which is is is the what is pointed to as the great benefit, often of arbitration in second with respect to the updates on the Senate. Based on Twitter, they appear to be discussing it right now. I can't say that it looks promising either way. Certainly the democrats seem to be winning the the Twitter war With rip off clauses is their dialogue, we also had the Treasury weigh in. So this seems like the right time for the fight to take place. The Treasury waited on the rule, and essentially took the position that the CFPB didn't appropriately study arbitration because they looked at the recovery or the amount paid out by companies as indicating that there is not an appropriate level of compliance relative to what would happen with just arbitration, where they're paying out far less money. Because far fewer arbitrations result in a in a settlement of, you know, you know, over talking overall dollars, the big difference is essentially, you know, goes back decades. It's what you think about trial lawyers. And on the Republican side, it's always been that this is a deadweight loss to society when you when you're just paying people to litigate this dispute. Let's look at the actual recovery to the industry. Consumer that you would say, look in an arbitration, you might recover $2,000 on your $2,000 claim, versus in arbitration, there might be a million people that are covering $3 on the claim. And often those those claims aren't really worth a person's time to even file to be part of the class action. I'm sure we've all gotten these things in the mail, where it's some class action, not clear what it's about, but your class member, do you spend the time to figure it out and mail it in? The data put in point to by the Treasury was something like 4% of the people send it in? So we go back to what is the purpose of dispute resolution? You can take the position that the big dollar amounts show that we are having an effect retributive Lee for punishing bad behavior, and that's very appealing when we hear about extremely bad behavior such as the Wells Fargo's tip that you pointed out 12:57 and What effect did this have on the revolving credit? environment as well. And I know that you'd mentioned that before to me. So maybe you can elaborate more on that for us. 13:05 Well, so that was one of the big areas where there was, you know, kind of dispute between the sides, essentially a way back like Bank of America was prohibited from using arbitration, I believe in their in their mortgage agreements pursuant to a settlement. And the the data reviewed was that there was no increase in in some of the the terms that they had before and after they were forced to drop arbitration. So the suggestion there is that arbitration doesn't actually lower consumer costs by reducing reducing this, you know, deadweight loss to plaintiffs attorneys. On the other hand, credit cards are a great area for class actions, because if you get one fee wrong, you've got a huge amount number of people and you've got some really deep pockets there. So you would expect that that credit cards would be a focus of a class action pursuit. For plaintiffs attorneys, attorneys generally who may not really know much about power sports in particular. 14:07 And I want to move on to some of the more recent, I guess, big circumstances that have happened in this space recently. So one of the more recent events is the Equifax data breach. So is the CFPB. Now more heavily scrutinizing credit reporting and maybe most of this time we can start with you. 14:26 Yes, it is. It was scrutinizing credit reporting before Equifax became the the focus. It had been concerned that credit reporting bureaus were not held to any particular account. They weren't specifically regulated before the CFPB was formed. They fell under the jurisdiction of the FTC. But it was kind of the Wild West and the big three bureaus Equifax, Experian. TransUnion were for gathering consumer data from the companies that provided it, especially lenders and, and then selling it back to those companies in the form of credit reports. The CFPB his concern was that the Bureau's were not taking responsibility for the accuracy of the information. They were not focused on the security of the information but the accuracy of the information, and they saw the consumer harm in inaccurate information being reported. And so there is a federal law that the Fair Credit Reporting Act that that spells out the precise steps that need to be taken when a consumer disputes the accuracy of something in their report in it Essentially puts the onus on the consumer to find accuracies and bring them to the attention of the credit bureau credit bureau then goes to the furnishers of that information and says, Hey, prove that this is right. So those who provided information in the first place really didn't have to prove it was accurate. It's only when a consumer brought it up, and went back to the credit bureau and said that the credit bureau then went to furnishers, which include lenders and said prove this is right. So what the Bureau has been concerned about and increasingly now, and now it's got the momentum of an angry Congress behind it. And angry consumers, it's likely going to crack down even more on not only the reporting of information and its accuracy, but the provision of information so that companies like auto and power sports lenders, that Do report to these, these credit bureaus are likely going to be required to take more responsibility for the accuracy of that information. 17:14 And David was anything went on? 17:15 Yeah, I think that circles back to the CFPB and vendor management and this is an area where they can, you know, make some make some hay because they've got a target to go after. But you as, as, as furnishers of information. And as users of information, you know, have to evaluate what's really happening here. As far as we know, Equifax lost all this consumer data. And in some respects, you as a furniture are giving someone this data knowing that on the other side, it doesn't mean necessarily that the information that they have in the Bureau has any inaccuracies whatsoever. So the decision of whether to use that as a separate decision and thirdly, you have your consumer to to be concerned about If you are paying on time, there's an expectation that it's going to help your credit score, and not just with two of the Big Three with all of them that another creditor might use. So you have that concern, your consumer may come back to you and say, hey, why is Why is this not in my Bureau? And finally, we've got all these credit freezes that are happening. I know I froze my credit, and there are going to be people walking into your dealership who frozen their credit. So I would suggest being proactive proactive about instructing dealers how to direct consumers to unfreeze before they muck up the deal. 18:36 So Another notable situation this year that I mentioned earlier, is the Wells Fargo CPI scandal that had happened. So my first question is to what effect does this scandal have on the powersports finance space? So David muhfuckas already? 18:52 Well, I'm not aware of anybody using this in power sports. You know, it's the biggest 18:59 topic So he was saying they did. 19:02 It was biggest in mortgage and that's where the live litigation has arisen. Wells Fargo is using it, there was a little bit of surprise to me, I've seen it in more like regional banks using it. And essentially, it's your consumer, you see, your insurance tracking shows a loss of coverage. And then you have a policy covering all all the vehicles in your portfolio, you say add this vehicle to the policy, and then that covers you up to your collateral and interest, meaning the the secured amount of the outstanding balance. The problems with it is it's been attacked from so many angles that it's hard to even know whether you have something that will pass scrutiny. First, passing on administrative costs is sometimes particularly prohibited by by statute even second, there's a notion of what it's covering. If it's covering skip tracing, then that's not something that your normal State Farm Insurance would cover. So The issue is, is it fair for the consumer to pay for premium that wasn't that partially wasn't something required on the contract? And then there's issues of kickbacks. So the product has been under attack for a long time. It's surprising when you see it still in the market. What Wells Fargo was doing is apparently, is the false positive problem. And essentially, national general and anybody that dealt with national general should reevaluate that relationship because they were clearly having false positive whether that was intentional or not. 20:31 Molly, Chevy think the attorney key takeaway lessons from this 20:37 is the key takeaway would be that, to the extent that CPI falls under the category of the broader category of ancillary product or add on product it's important for any lender to ensure that the borrowers have full disclosure and a full understanding of what they're being charged for this this is just one example of how charging them for something that they didn't know they had or needed and in fact didn't really need can can really trip up a lender. 21:15 Somali last year you had mentioned something interesting about whistleblower tips. So first, I want to see if you can elaborate more on what that meant and any sort of advice you have for dealing with that. 21:28 Sure, whistleblower tips. 21:31 It's worth it to distinguish between whistleblower tips and consumer complaints. whistleblower tips generally come from inside a company or inside an industry say from a vendor or a competitor. And they they tip off a regulator about some kind of practice that is creating consumer harm in our in our context and Those might not have been brought to the attention of a company before they're brought to the attention of a regulator. Sometimes they are. And if if somebody inside the company or or a service provider or or a competitor brings something to lenders attention, it says this your you got a violation going on here. It's worth paying attention to especially so that you can get on it and address it before the regulator's decide to a consumer complaint is is what gave rise to the one of the major FCRA actions last year. And it was brought to the attention of a company who chose not to address it, then that same consumer went to the regulators about it, and it blew up. A consumer complaint is by somebody who use the service or productivity That company and they're complaining about their individual transaction. And in that sense, it's it's contained and generally can be resolved one way or another. Before that consumer goes and gets a regulator involved. Once a regulator sees it, they might be aggregating, they might be counting it up, among other complaints that involve that company, and it can, it can blow up into something much bigger than it really needs to. So I can't emphasize enough how worth it it is to read and listen to individual consumer complaints that come through, address them the way the CFPB prescribes, but also really take them seriously. It's not just a matter of process, it's also a matter of, of heating what's going on and trying to resolve it while it's a small issue. 23:58 And David, do you have any other advice for How to handle consumer complaints. 24:02 Yes, I'd say that you need to value evaluate the merits of the claim. Often consumers will be in a default scenario and they're seeking some sort of extension or modification. And that's when the complaints arise, where there's no wrongdoing, the wrongdoing maybe happens when the it becomes a customer service escalation of words or emails or things like that. So it's important to have processes to respond to people, you know, with respect to prevent things from blowing up to meritless or or merit worthy complaints that are really could have really started with no credit or wrongdoing whatsoever. 24:49 And last year, the CFPB started using mystery shoppers I think, last June and the first case was that discovered discriminatory mortgage lending at bancorpsouth bank so Want to see? Is the bureau still using mystery shoppers? Or what should lenders Be wary of in that department? Anybody could take that one. 25:07 As far as we know, yes, Bureau is still using mystery shoppers. They're being mysterious about it. We learned of the bancorpsouth mystery shopping situation because it did culminate in an enforcement action. So they there may be mystery shoppers among us now. Or just out in in daily transactions. And we might not know about it, because an investigation might get closed. And it might might be resolved short of a public enforcement action. So we're not likely to hear of each time mystery shoppers are being used. And I think what's what's important to keep in mind is that it's good to instruct your Representatives to treat each consumer as a potential undercover regulatory agent. And that just means sticking to the the, the compliance rules that you have in place sticking to processes that are in place and, and treating each consumer carefully, as as I'm sure you all do anyway, 26:27 David was everything worked out about mystery shoppers, 26:30 I would just add to what Molly said is think about how you respond to any kind of request or inquiry as being trying to make it as mechanical as possible. So that there's to minimize the appearance of a judgment call, which I think that the CFPB really hones in on or regulators generally hone in on who's what exactly are you doing here, if you give this customer service rep discretion to decide who gets an extension who gets a tear bomb who gets a modification and who doesn't? 26:59 And Improper repossessions is is clearly an issue across the industry, especially as it relates to the servicemembers civil Relief Act. So what should powersports owners Be wary of when dealing with repos and the CRA other than frequently checking the dmdc database? That seems like that's the most common advice to give, but is there anything else that they could be doing proactively and maybe, David, we can start with you this time? 27:21 Sure, I'd say detailed account notes, train your reps to have their ears ready to hear something about the military or being in the military. You know, this may not be someone that actually has the the rights under the CRA, but using the dmdc database is not a safe harbor. So it's whether the person is in the military, it's not whether the dmdc database had a hit. 27:46 We saw that play out recently with a major lender, who, who was ordered to pay $907,000 27:59 in refund To 28:02 service members for violations of the CRA And specifically, the violations were that they repossessed cars of active duty service members. And and where the company had tripped up is that they failed to read their own loan files, they failed to read any account notes that actually said that, that this, this was an active duty service member, or, or a service member had reported to this lender that they had been ordered. ordered to into service. And so they may well have been checking that that database that they're required to, but they had all the information right in front of them and just didn't didn't read it. And for that reason, they didn't go get the court orders before repossessing those vehicles as they're required to under this era. 29:06 And in terms of repo notices, how often should lenders be reevaluating those or updating those? Maybe Molly would start with you 29:19 should be 29:22 reviewing and updating them 29:28 regularly. I mean, I don't have a good answer for that. It's if if the law changes if there's some amendment to the FCRA. Of course, they need to, they need to pay attention to that. 29:43 But with regard to 29:46 repossession notices in general, it should be a part of their their regular compliance practices. 29:56 Take a couple questions in the audience as well. So there has been increased scrutiny of ancillary products and auto Have you seen the same in power sports? And are there particular issues and power sports? Maybe David, we can start with you. 30:07 Yeah, I would say that, from the perspective of the regulators. If you have a sales finance license, you should expect scrutiny of any gap policies. And in particular, you should have in place policies with respect to what to do when the contract terminates early, and there's a refund. Obviously, it's another No, the other big one was with Wells Fargo. The the issue would come up in the same same way you're going to get a question on exam, what's your refund policy, and then they're going to look at your contracts to see what you've done. 30:44 And do you think regulators are moving towards making lenders responsible for refunds on add on products for example, warranty and gap in the case of early payoffs? 30:56 Well, I mean that they I think they'd like to but is their statue Support for it. And that's where you come to. It's not even necessarily required. You know, if you pay off your contract early and you've got a service contract, you're still driving that. So you still need service. So if it's particularly a credit related product like gap, you need to really focus in on that service contracts less so maintenance less so because in all likelihood, there's not going to be any refund provision whatsoever for that product. 31:28 And ultimately, lenders are on the hook for fraudulent dealers in their network. So what are some best practices for regulating that network and making sure dealers are staying compliant? Maybe Molly we can start with you this time 31:43 is pay attention to 31:46 loan outcomes to the extent that the lender can be in touch with the dealer after loans are made to and pay attention to any any action actions that are taken against the dealer by consumers alleging any kind of fraud or vice versa, if dealers have a record of consumers that that have committed alleged fraud to the extent there's a lot of communication in all directions, and I heard that addressed earlier on one of the earlier sessions, it the industry would would really benefit from a lot of comparison of notes and data on that front. Now lenders who have have identified a potentially problematic dealer, 32:42 if possible, should just cut them out of their dealer network. 32:47 David everything. 32:50 Yeah, I would add that you can look at your data and see elements such as high product penetration and the amount of dealer compensation that they're getting in each deal to see if there's any high concentration any outliers, and then going back and auditing the the information provided in the credit application, because that's ultimately, both what you're making your credit decision based on and what is going to look look be reviewed in, in reviewing whether you're being responsible as a lender. 33:27 And I also want to talk about dealer fees as well. We heard this kind of discuss a little bit this morning. How do you think increased regulation will affect lenders given that many don't have flat fees? So if they go after powersports lender and they make that lender put a cap on the amount that the dealer can increase their margins? How will that affect powersports in particular? And maybe David would start with you. 33:49 Sure. I mean, I think we saw at evergreen bank was a fairly early disparate impact rate participation. consent order And I didn't see any fallout from that. In the power sports world. Of course, Honda had their had their consent order as well. But those things seemed to have gone a little bit quiet. I mean, there's rumors of that several more kind of in the pipe with with big companies, but I haven't seen it it have an impact. And what could happen is if somebody gets stuck with a particular finance company gets stuck with it with a cap, if that cap is low, then they're at a competitive disadvantage against the smaller players that are less likely to be under regulatory scrutiny. 34:37 Emily was everything going back to that? 34:40 There was a good observation made earlier that power sports finance is about 10 years behind auto finance in terms of a lot of practices, and and frankly, the scrutiny that we're talking about. And so there's an advantage to that where power sports lenders get to watch what happens to those out in front of them and and see where the potholes are and see what practices worked and and what got the auto lenders into trouble. And they can adjust accordingly. And I would I would caution powersports lenders from waiting too long before changing their practices according to what's been working or not in auto. There I get a sense sometimes that that this industry is awaiting scrutiny before changing practices. And I think that the dealer fees is a really good example of where they could get out ahead and innovate based on what happened on the in the auto realm and on the other hand it is Worth it sometimes to import what's going on in auto into power sports, but not to follow too closely behind so closely that that 36:11 that the lumps and holes can't be anticipated. 36:15 So 36:17 I think it's worth it to be pondering what's happening on the auto lending front. Whether it was the fair lending issues that have that have come up and and I do think the power sports lenders have have taken those into consideration and and the progress has been made on that front. And there's other other practices that even if it hasn't affected this industry yet would be worth it to consider bringing on board. 36:50 And the CFPB has emphasized dealer oversight and auto Are you seeing the same in power sports, and in other words, our dealers under greater scrutiny, they will from what you're seeing remind me can start 37:02 They are. 37:04 But it's worth it's worth noting that the CFPB tends to look at harm to the greatest number of consumers or a great amount of harm to a small amount of consumers. And so they they pick and choose the practices and the industries that they go after. Based on those two considerations. And to date, power sports doesn't always fall under either of those categories. And we make arguments that that it doesn't, that there aren't as many consumers at stake, and that the any practices they might be looking at are not are not worth the dollar amounts per consumer, as as have come up in other industries. So That's, that's what they've been considering so far. And so far so good. But 38:09 that that 38:11 that's no guarantee that there won't be some kind of 38:16 scrutiny that leads to enforcement action in the future. 38:20 And David, everything even add to that as well, if there's more increased scrutiny on dealers? 38:26 Well, I'd say they still they still lack it, you know, examination authority against dealers. But I, they're looking for bad actors, I think any regulator FTC, attorneys general, they're looking for bad practices, and when they become aware of them, they're, you know, they'll consider make those considerations, the greatest, you know, allocation of resources, but I just haven't seen a lot on the on the power sports side so far. 38:57 So there's been an increase in the regulation of cash. Capital Markets, what should new issuers be aware of? Maybe data, we can start with you this time? 39:05 I do not know a ton about capital markets. I mean, I would say, you know, look out for hide all rates. 39:13 Molly, was there anything that you looked at? 39:16 Yeah, look at the quality of the underlying assets, which are the loans. And I'm sure that they are doing that already. 39:27 And so when it comes to building out and retaining top talent for compliance staff, what are some key do's and don'ts? And maybe David, we can start with you? 39:37 Sure. I think that it goes down to starts with the focus of the board of directors that this is an important area of the company. It's not just a cost center. And then you want to ideally, as an employee, you want both to be compensated and have opportunity for advancement. So your compliance department shouldn't be a dead end career wise for a person deciding which area the company to go into, or maybe which which company to, to work for. 40:07 And then Molly have a follow up from you. Some of the audience is wanting to know if dealers don't need to be concerned with compliance issues. Is that what you're saying earlier? Maybe you could elaborate more on that for them. 40:24 dealers should be concerned with compliance issues. 40:30 Because again, and David said it well, a minute ago, they're looking for bad actors. And there are times when the Bureau has set aside the two factors I was talking about harm to the greatest number of consumers or the greatest dollar amount of harm to each consumer. And they've said, they said, this is a bad company. This company shouldn't be allowed to do business like this. There may have been just a couple of people harmed by that. And the dollar amount may have been small. But somehow it just got under the skin of the Bureau and the director said, we have to stop this. So egregious practices are risky. And dealers should not feel like they have a free pass, even though so far they haven't been under the jurisdiction. The FTC still has authority, like David said, so to the state attorneys general. And to the extent there isn't strong federal regulation on one front or another, or to the extent federal regulation weakens on a certain front, we usually see the state regulators step in and crack down even more within their states. So So no, dealers are not immune to 41:54 regulatory scrutiny. 41:56 It's just that they've they've enjoyed For a while. 42:03 So for many lenders have heard this morning they've been targeting expansion and getting into additional states, especially as new entrants come into the space. So I wanted to get each of your advice on tips and advice for state licensing. So what should they be wary of compliance wise when moving into these new states and maybe data, we can start with you? 42:23 Sure, you should start with figuring out what you're going to need information wise and what you'll have to have in place. Policy wise, I mentioned earlier, a gap policy will be necessary for some, some states, then prepare your executives for the how invasive these states will be in terms of fingerprinting background checks, because those are important things that can result in, you know, delays, you're not you're not sure what's going going on. But, you know, if you have a large launch target, the more people know, the sooner the better. And I would also add that you're going to get end up getting very familiar with the nmls which is how a lot of the licenses operate. 43:07 So essentially, prepare, 43:11 get your policies ready. And, you know, give yourself a lot of lead time before you launch. 43:20 Is there anything you want to add to that? 43:24 Yeah, given that, that the states might vary so much in terms of the licensing and in various requirements, it is going to take a lot of time. And that should be built in to a budget for for moving into new states. 43:43 I think we have time for one more question. So how will the New York cyber security law impact powersports? 43:52 Well, I could start by saying that the New York cyber security law it suggests or presupposes that there's possibility of a very high level of cybersecurity sophistication that you have either in house or at your disposal through third party. So it's going to be either there's going to be need to be a new person at your company who is an expert in this, or you have someone who is in charge of the relationship with an outside expert to implement these requirements. Right now, you should have somebody in charge that should be board approved. And you should be taking part in your internal risk assessment with what's going on. I've heard from the regulators in New York, typically when they look at somebody, they they're at about a two out of five, and they want to get you to a five. So it's, it's not so much the first time they look at you. It's that next time, you're going to have to show progress in what you're doing. So prepare for New York specific expenses, and to really ramp up your your expertise, your multi factor authentication, perhaps, in how you operate your your your data center. 45:04 Since we stand between the audience and the cocktail reception, no 45:10 good point with that, that that's all the time we have for this session. So thank you again for joining us. [/toggle]

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