Lucy Morris, partner at Hudson Cook, said the chances of automotive finance organizations being scrutinized for abusive practices could increase in accordance with the directives outlined in Mulvaney's memo.
The CFPB likely will be careful not to impose new rules for enforcement. However, state regulatory agencies could write their own legislation, picking up where the CFPB might leave off.
"Regulators, I think, will continue to use their state UDAP (unfair, deceptive, or abusive acts and practices) authority to look at issues in auto finance, like ability to pay, making sure that there aren't abuses in the repossession process, making sure that consumers aren't being put into finance deals that they can't afford and are destined to fail," Morris said.
Mulvaney's interest in reforming the bureau's processes surrounding Civil Investigative Demands and investigation hearings was also discussed during the webinar. Hudson Cook anticipates attempts to ameliorate the investigative and enforcement process will keep the CFPB busy.
"I could see ways they could tighten that process up. I see ways to make this a less burdensome and more fair process," Morris said.
It's possible the bureau might become more selective in their investigations, she added, noting the abrupt termination, under Mulvaney, of several cases championed by Cordray. A focus on fraud, and more egregious cases of consumer harm, will likely reduce the number of investigations. Also, litigation will have more consistent outcomes because of the pursuit of "clearer cases," Morris said, increasing the likelihood the bureau will resolve cases with more compromises than it has in the past.
Despite the potential drop-off in investigations and a lower emphasis on enforcement, webinar participants said compliance shouldn't be put on the back burner.
"It's a really good time right now to get your compliance house in order while enforcement, at least at the federal level, might be taking a breath or taking a pause, so to speak," said Brian Larson, sales director at Compli. "It's always much easier, probably more efficient, to take care of those housekeeping items now as opposed to when it swings back the other way and you have to play catch-up. What organizations are doing now about compliance and their [compliance management system] potentially could matter if you are involved in some type of audit or review or investigation in the next few years."
In particular, webinar participants said, compliance on collection processes will become increasingly more important as the auto finance industry focuses on portfolio servicing rather than loan origination.