CFPB Issues Final Auto Finance Larger Participant Rule and New Auto Finance Examination Procedures

19 June 2015
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Key takeaways

  • The CFPB issued its final auto finance larger participant rule, which is largely identical to its proposed rule, to bring under its supervisory authority an estimated 34 firms, amounting to 91% of the non-bank auto finance market.
  • Although the CFPB received several comments urging the Bureau to reconsider its coverage of auto leases in the final rule, the Bureau made clear that it believes that most auto leases are already covered by the Dodd-Frank Act’s definition of “financial product or service,” as they are the “functional equivalent of a purchase finance arrangement.” That is, the Bureau takes the view that, from the consumer’s perspective, leasing operates as a process similar to financing the purchase of a vehicle and thus should be included in this definition.
  • In conjunction with the final rule, the Bureau published its Auto Finance Examination Procedures, which cover a number of areas within the auto finance market that the Bureau plans to examine. These areas include origination, advertising and marketing, collections, repossessions and servicing, consumer complaints, optional products and the overall compliance management system, indicating that the Bureau plans to take a comprehensive approach when it begins to examine firms.