Are you sick of the word compliance yet?
It was the center of industry conferences, company strategies and news stories this year. And while compliance is a tired word, it will likely continue to be a pillar of auto finance in 2016 and beyond.
News about the Consumer Financial Protection Bureau’s actions against auto lenders dominated Automotive News’ list of the best-read F&I stories of 2015. Based on the status of regulators’ and legislators’ positions in the fight against potentially discriminatory auto lending, it’s bound to be a regulatory-driven 2016.
Legislators came after the CFPB this year with a bipartisan bill that would significantly limit the CFPB’s guidance over auto lending. The bill easily passed in the House of Representatives in November. Now it has moved on to the Senate for consideration.
Members of the House emphasized the importance of nondiscriminatory lending practices but challenged the CFPB’s methodology in determining race. Because Sen. Elizabeth Warren, D-Mass., headed the formation of the CFPB and President Barack Obama opposes the bill, expect a different tone to the debate in the Senate.
Pressure on captives will also keep compliance in the limelight. In 2015, American Honda Finance Corp. settled with the CFPB and Justice Department over charges of unintentional discrimination. Regulators are investigating the finance arms of Nissan and Toyota. Charges could come in 2016.
As regulators continue to put lending practices under a microscope in 2016, auto lenders will probably keep a watch on compliance tactics within dealerships’ F&I offices.
This year, news and conferences seemed saturated with compliance talk. We’re not finished with that conversation just because we turned a page in the calendar.