For years, 4 letters have struck fear into the hearts of auto finance professionals:
CFPB.
That’s the Consumer Financial Protection Bureau, the government agency in charge of enforcing federal consumer protection laws in banking, lending, and other financial matters. Shortly after its creation in 2010, the CFPB launched an aggressive and at times controversial campaign against financial organizations throughout the United States. The Bureau became known among critics for “rulemaking through enforcement” and “pushing the envelope.”
Of all the CFPB’s targets, the auto finance community has perhaps had it the hardest. Auto finance laws are, in a word, complicated. Dealerships, and especially F&I departments, need to keep dozens of rules and regulations in mind at every moment and in every interaction with customers. Those rules and regs change constantly. Some statues have varied considerably over the years (hello, Military Lending Act) in terms of updates and legal interpretations, leaving dealers and lenders open to substantial, unpredictable risk.
Throughout it all, the CFPB has continued bringing down the proverbial hammer while at the same time going through a series of constant changes itself. Director Richard Cordray left the Bureau abruptly in 2017. His replacement, Mick Mulvaney, signalled an intention to overhaul operations (even changing the acronym to “BCFP” for a spell), but only kinda-sorta changed things. Just over a year later, Mulvaney was succeeded by Kathleen Kraninger.
Under Kraninger, the CFPB seems to have begun an evolution into a calmer, more collaborative industry regulator—one that strives to listen to the financial organizations it oversees. Earlier this year, the Bureau launched a series of symposia—the first of which dealt with the word “abusive” in the contentious statutory language of “unfair, deceptive, and abusive acts and practices.” Many members of the industry see this as a step in the right direction. Most people can agree that clarifying UDAAP is a good thing, regardless of where they stand politically.
Now, the CFPB is continuing its recent pattern of listening with the creation of a consumer finance “task force.” That’s not as militaristic as it sounds.
“The Consumer Financial Protection Bureau is creating a task force to examine federal consumer finance laws. It’s looking for gaps and loopholes that cause harm to consumers and areas of complexity that could be smoothed out for lenders.
The auto finance community believes the task force signals a positive change in the bureau—a willingness to learn and understand rather than lead with enforcement.
On Oct. 11, the bureau announced plans to solicit assistance from a team of seven consumer protection experts knowledgeable in financial services. The team—one chair and six members —is to recommend ‘ways to improve and strengthen consumer financial laws and regulations,’ according to the CFPB.
The task force, which will report directly to Kathleen Kraninger, CFPB director, is also seeking ways to harmonize laws surrounding consumer finance.”
Read “CFPB task force could smooth inconsistencies in auto finance.”Don’t let any acronym—be it CFPB, UDAAP, DOJ, FTC, AG, etc.—strike fear into your heart. With the right resources and tools on your side, you never have to engage in an adversarial relationship with a regulator. KPA has your back. Start with our guide to the regulations that impact your dealership.
