Adjusting To CFPB's Auto Finance Examination Authority

On Aug. 31, the Consumer Financial Protection Bureau rule that enables the CFPB to supervise the biggest nonbank automobile finance companies will take effect, subjecting the auto finance industry to new and unprecedented regulatory scrutiny. Finance companies across the country are bracing for their first CFPB examinations. Given the recent CFPB settlement with one of the biggest finance companies, nonbank auto lenders should pay special attention to fair lending risk as they build out their compliance functions.

Background

Dodd-Frank expressly authorized the CFPB to supervise by, for example, conducting supervisory exams on very large banks (i.e., those with more than $10 billion in assets), nonbank residential mortgage lenders, brokers and servicers, payday lenders, and private student lenders. It also authorized the CFPB to supervise nonbank "larger participants of a market for other consumer financial products or services," once the CFPB had defined such