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MoFo Reenforcement The Enforcement Blog

CFPB Proposed Rule: Federal Oversight of Large Non-Bank Auto Finance Lenders

Posted in Auto Lending, CFPB

On September 17, 2014, the CFPB issued a proposed rule which, if adopted, will broaden the CFPB’s enforcement authority to cover non-banks that offer automobile loans to consumers, as long as those non-banks are “larger participants” in the automobile loan market. This would mark the first time that non-bank auto loan companies would be subject to the supervisory regulatory authority of a federal agency. The proposed rule was published in the Federal Register on October 8, 2014 and public comments are due by December 8, 2014.

The Dodd-Frank Act granted the CFPB oversight over “larger participants” in markets that impact consumer finance as defined by a CFPB rule. The proposed rule defines a “larger participant” in the auto finance market as an entity that makes, acquires, or refinances at least 10,000 auto loans or leases in given year. The proposed rule would have a significant impact. The Bureau estimates that 38 auto finance companies would fall within the definition of “larger participant” and estimates that the impacted companies originate around 90% of non-bank auto loans and leases.

When exercising its new supervisory authority, the CFPB will be seeking to ensure that auto lenders are not using deceptive tactics to market loans or leases; that information provided to credit protection bureaus is accurate; and that auto finance companies are not using illegal debt collection practices.