As compliance pressures grow stronger, dealers and lenders must evolve

Compliance was the predominant theme of the auto finance and retail world a few years ago.

From 2013 to 2016, the Consumer Financial Protection Bureau settled publicly with four major auto lenders over potentially discriminatory auto lending practices: Ally Financial, Fifth Third Bank, American Honda Finance Corp. and Toyota Motor Credit Corp.

During that time, compliant practices became even more crucial to lenders and dealers.

The lenders disagreed with the bureau's methodology to determine discrimination and said they do not condone inequality. The companies also took steps to educate consumers and dealers including consumer financial literacy programs and dealer compliance training.

The bulletin that allowed the CFPB to oversee auto finance was rescinded last year, and there is new leadership at the bureau. Some dealers believed such changes would lead to a decrease in regulatory pressure, but it hasn't — and it won't, compliance experts say.Compliance is still important — state regulators picked up where the CFPB left off, and the Federal Trade Commission continues to regulate dealers.

Today, as dealers confront pressures they didn't face a few years ago, such as declining new-vehicle sales and shrinking profits, they may struggle to master the balance between compliance objectives and profit goals. And to speed vehicle purchases, some may be tempted to put compliance on the back burner.

But dealers should follow the steps to ensure compliance, experts say, and many customers don't even mind if going through the paperwork takes extra time, according to a survey by Automotive News and DealerRater.

For more than 80 percent of respondents, going through the paperwork gives them a sense of security in their purchase and financing agreement.

Some of the transaction is becoming more digital, which has made dealerships more efficient and compliant, experts say. But having the right people behind the finance desk, following a consistent process, is still key.

In this section, Automotive News will explore the status of F&I compliance, the prevalence of the compliance officer, how technology plays a role in the compliance landscape, the ongoing discrimination discussion and more.