Compliance focus dents other spending, AFSA chief says

Stinebert: “How much can you do when your focus and so much of the leadership within the organization has a singular priority?”

DETROIT -- Compliance remains a hot topic in auto finance these days, but auto lenders’ investment in compliance training may be digging into their spending on technology and other business resources, the American Financial Services Association said this week.

“I think there’s an overreliance in using all of their available resources to prepare for compliance, especially now that they’re under the larger participant rule,” AFSA CEO Chris Stinebert said during a discussion with Automotive News editors and reporters this week.

In June, the Consumer Financial Protection Bureau published the “larger participant rule,” giving it oversight of any nonbank lender -- including automakers’ captive finance arms -- that originates 10,000 or more auto loans or leases annually. The CFPB now has supervision over 34 of the largest nonbank auto lenders, which, the bureau says, originate about 90 percent of nonbank auto loans and leases.

‘Quantitative issue’

The rule includes not only big auto lenders but also small lenders with tiny market share that could see their compliance costs rise, Bill Himpler, AFSA executive vice president, told Automotive News in September 2014, shortly after the rule was proposed.

Lenders would like to spend more resources on technology, risk analysis, big data and predictability models, Stinebert said this week.

That doesn’t mean auto lenders are completely disregarding those other areas, Stinebert said, but it’s a “quantitative issue.”

“How much can you do when your focus and so much of the leadership within the organization has a singular priority?” he said.

Hiring a compliance manager or a compliance department isn’t enough to ensure compliance, Stinebert said. “The CFPB has made it very clear that it has to be from the top down.”

5 to 20 hours

Depending on the finance company and the employee’s position, a staff member could be spending five to 20 hours on compliance training per quarter, Stinebert said. “Everybody within [an auto lending] organization, many of those who never touch or see a consumer, all have to have compliance training.”

AFSA University has more than 100 compliance-related training courses designed for individuals at various levels of a company. The compliance programs started about a year and a half ago, and as of last month, 22,000 employees from AFSA’s member companies had participated.

You can reach Hannah Lutz at -- Follow Hannah on Twitter: @hm_lutz

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