This week, the CFPB issued a long-anticipated final rule under which it will, for the first time, allow the Bureau to supervise non-bank auto finance companies. Although the Bureau currently supervises the auto financing activities of banks and credit unions, the new rule will define as “larger participants” in the “automobile financing” market any non-bank company that has at least 10,000 “annual originations” of consumer auto finance products, including auto loans, refinancings, and leases. According to the CFPB, this definition includes 34 of the nation’s largest non-bank auto finance companies, which together original approximately 90% of non-bank auto loans and leases in the United States.
Although the rule does not impose new substantive consumer protection requirements, it allows the Bureau to supervise them under the Dodd-Frank Act, monitoring such companies for compliance with consumer financial protection laws including the Truth in Lending Act, the Equal Credit Opportunity Act, the Consumer Leasing Act, and the Dodd-Frank Act’s prohibition on unfair or deceptive acts or practices. Coinciding with the publication of the new rule, the Bureau has updated its Supervisory and Examination Manual to give its examiners guidance in supervising non-bank auto finance companies. According to the CFPB, its supervisory focus will include evaluation of whether lenders are fairly marketing and disclosing auto financing terms, providing accurate information to credit bureaus, treating consumers fairly when collecting debts, and lending fairly by complying with the Equal Credit Opportunity Act and other laws.