But so far, the Service Contract Industry Council -- a trade group for automakers, captive finance companies and service contract administrators -- has kept a low public profile with regard to potential new regulations from the bureau.
"We are working quietly to come out with responses to inform people what we do and why we're a valuable product," attorney Tim Meenan, who represents the council, said in a phone interview last week.
His firm, Blank & Meenan in Tallahassee, Fla., represents three groups that share many of the same members: the Service Contract Industry Council; the Guaranteed Asset Protection Alliance; and the Motor Vehicle Ancillary Products Association, whose members' offerings include such F&I products as key-fob replacement and/or paintless dent repair.
"There will be a right time for an interface with the CFPB," Meenan said. "The members collectively are working on how and when."
That's in sharp contrast to verbal fireworks over the CFPB and dealer reserve, the amount dealerships earn for acting as a middleman on consumer auto loans.
Since March, the CFPB has pressured auto lenders to either stop using dealer reserve to compensate dealers and switch to flat fees or else monitor loans originated at dealerships much more closely. The bureau says it is making sure legally protected groups such as minorities and women pay the same dealer reserve as everyone else.
The National Automobile Dealers Association has objected. For starters, NADA denies that its members tolerate discrimination. The dealer group and auto lenders also dispute the CFPB's methodology for deciding whether an individual consumer belongs to a protected group and whether a "disparate impact" in dealer reserve is the right way to define discrimination.
Nevertheless, since March several auto lenders have acted on the CFPB guidance and sent letters warning dealerships they could be considered guilty of discrimination because their average dealer reserve for various protected classes is higher than for nonprotected borrowers. Some lenders threatened to switch to flat fees or to terminate dealerships whose numbers don't improve.
Meanwhile, the CFPB has signaled it is also interested in F&I products. In June the bureau ordered Minneapolis-based U.S. Bank and Dealers' Financial Services of Lexington, Ky., to refund a total of $6.5 million to military service members who received auto loans through Dealers' Financial Services' Military Installment Loans and Educational Services, or MILES, program.
The CFPB said the companies sometimes minimized the cost and exaggerated coverage of extended service contracts and GAP. The bureau ordered DFS to rewrite disclosures to: emphasize that add-on products are optional, that they don't have to be financed along with the vehicle, and that financing the products costs more than paying cash. U.S. Bank has dropped its participation in the MILES program.
At the Industry Summit F&I conference in Las Vegas last month, several F&I administrators said they think it's a foregone conclusion lenders will drop dealer reserve, also called rate participation, and switch to flat fees. They were also worried that F&I products are next on the CFPB's agenda.
"To me, it's a given rates are going to go away. There's going to be some sort of flat fee," said Jimmy Atkinson, COO of AUL. AUL is a service contract administrator based in Napa, Calif., and a member of the Service Contract Industry Council.
"The repercussion [or benefit] for us is F&I managers are going to sell more products" to make up for dealer reserve, he said.
However, the F&I administrators said regulators don't understand the cost-benefit relationship for F&I products. They called for an industry effort among their companies, dealers and lenders to "educate" the CFPB and others. After the conference, an NADA spokesman referred questions on F&I products and the CFPB to the Service Contract Industry Council.
Council attorney Meenan said the groups he represents have laid some groundwork for the education effort but had no initiatives to announce as yet.
"We have come up with a working group that includes members from each of the groups. ... We have hired Washington counsel to represent all three trades," he said. "But, frankly, today is not the day we're going to make any pronouncements."