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CFPB to Supervise Nonbank Auto Finance Companies

CFPB to Supervise Nonbank Auto Finance Companies

Today, the Consumer Financial Protection Bureau published its nonbank auto finance company "larger participant" rule and related examination procedures. The final rule allows the CFPB to supervise larger nonbank auto finance companies for the first time. The final rule, largely unchanged from the proposed rule, will take effect 60 days after it is published in the Federal Register.

The final rule extends the CFPB's supervision jurisdiction to any nonbank auto finance company that makes, acquires, or refinances 10,000 or more loans or leases in a year. These companies will be considered "larger participants" and the Bureau may oversee their activity to ensure they comply with federal consumer financial laws, including the Equal Credit Opportunity Act, the Truth in Lending Act, the Consumer Leasing Act, and the Dodd-Frank Act's prohibition on unfair, deceptive, or abusive acts or practices.
The Bureau estimates that it will now have authority to supervise about 34 of the largest nonbank auto finance companies and their affiliates that engage in auto financing. The companies together originate around 90 percent of nonbank auto loans and leases. The final rule also defines additional automobile leasing activities for coverage by certain consumer protections of the Dodd-Frank Act.

The CFPB's release suggests that the Bureau's examiners will be looking hard at marketing, credit bureau reporting, debt collection, and fair lending.