INDIANAPOLIS -- A group representing auto remarketers, seeking to stay a step ahead of federal regulators, is considering a proposed template for an audit process to help its members review how auction companies handle consumer information.
The standards committee of the International Automotive Remarketers Alliance drafted the template as a way to help financial institutions comply with rules being set by the Consumer Financial Protection Bureau, said Dan Heinrich, chairman of the committee.
The committee was set to present the proposal to the group's board of directors last Friday, Sept. 20. Heinrich said there will probably be changes to the proposal but the committee hopes the remarketers group and the National Auto Auction Association eventually will endorse it.
The proposal covers computer data security, access to accounting and inventory, how customer data are backed up, employee hiring and background checks, confidential handing of nonpublic customer information and other issues.
The Consumer Financial Protection Bureau hasn't approached alliance members about how they handle consumer information during remarketing, but the group wants to be ready when it does, said Heinrich, who also is vice president of asset remarketing for General Motors Financial Co. Use of outside vendors, such as auction companies, does not remove compliance responsibility from remarketing companies, he said.
"When the CFPB looks at how we are protecting consumer information, not only do they look at our company, they look at how our vendors are handling it, and they are holding us responsible," Heinrich said this month during an interview at the National Auto Auction Association conference here.
"If we can all accept this one standardized process -- and realistically I don't think we'll ever get 100 percent of everybody's needs, but if we can get 80 percent -- that's a huge benefit to the auctions," Heinrich said.
Janet Barnard, COO of Manheim, the nation's largest vehicle auction company, said Manheim would support a single standard audit report that it could complete for each consignor.
Consignors could include rental fleet companies, finance companies' remarketing arms and other entities that sell vehicles at wholesale auctions. Under the alliance's proposal, some consignors might add questions to the audit form, but for the most part, auction companies would be able to fill out a common form for all consignors.
"If every one of them comes up with their own form to fill out, that's going to be pretty onerous and would take us away from the core of the business and the service we're trying to provide," Barnard said. "There's no question. We're hearing loud and clear from our consignors that this might be their biggest single concern right now."
Rob Wagner, chairman of the alliance and remarketing director at Hyundai Capital America, said alliance members can start using the proposal now as a guideline, but cautions that it will likely change.
Though the alliance's proposal aims mainly at auction companies, it also would apply to repossession agents, Wagner said, and possibly other companies such as vehicle transporters and third-party inspectors.
Frank Hackett, executive director of NAAA, says he attended a meeting in which the alliance's proposal was discussed but nothing has been formally presented to the auction group. He said he didn't know enough about the proposal to predict when NAAA might act on it.
"There are a lot of eyes on it but anytime you're writing anything that has to do with rules and guidelines, it takes a while before you have anything final," he said.
The remarketers' alliance was formed in 2001 to provide a forum for consignors to address remarketing industry issues. Among its members are captive finance companies, auction companies, banks and other financial institutions.
The CFPB began operating in 2011 as part of the Dodd-Frank financial reform law to regulate providers of consumer financial services.
Wagner, the alliance chairman, says a survey of his members who are involved in consumer auto financing and vehicle remarketing found that virtually all were reviewing CFPB regulations.
But "almost zero" had "concrete plans for how to respond and interface with CFPB," he said. "We all know we need to do it."