Dealers Urged to Polish Fair Lending Practices as CFPB Rule Looms

by Hannah Lutz

for AutomotiveNews

August 2015

Dealers, learn your lenders’ fair lending policies and polish your own.

That’s legal experts’ advice to retailers looking to prepare for the Consumer Financial Protection Bureau’s final larger participant rule, which takes effect Aug. 31.

How to Keep the F and I Office out of Trouble

by Jamie LaReau
for Automotive News
August 2015

Dealers' goals and those of finance and insurance managers tend to be at odds. 

Dealers seek high customer satisfaction and loyalty and long-term revenue. F&I managers are inclined to focus on short-term profits and maximizing opportunities to generate them. 

If F&I managers prioritize their aims instead of dealers', it could lead to serious problems in the F&I office, such as a slew of chargebacks on F&I products or even illegal practices, industry insiders say. To minimize that risk and ensure customers have a positive F&I experience, they say, dealers should: 

•  Design a process that prevents bad F&I practices and enforces consequences. 

•  Boost F&I education and training. 

• Scout top-notch hires who manage their own credit well.

•  Devise pay plans that shift the focus from commissions to customer satisfaction. 

What's Next in Credit Compliance

by John Stevens

Wards Auto
June 22, 2015

As the Consumer Financial Protection Bureau continues to increase pressure on compliance regulation, the market is wondering what will come next. Will more lenders implement flat rates? Will the CFPB find a way to extend its influence into the F&I space? Will Congress step in and impose restrictions on the CFPB?

With so much up in the air, both dealerships and lenders are waiting to see what is in store.

The CFPB's Encroachment in the F&I World

by Brian Casey
AgentEntrepreneur
February 4, 2015

When Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act, both the auto dealer and insurance industries were at the table to be sure they were carved out from the jurisdiction of the now powerful Consumer Financial Protection Bureau, better known as the CFPB. As is frequently the case, however, legislative exemptions are usually not wholesale in nature, and later interpretations of law can whittle them back from their ostensibly intended purposes. This may indeed be the fate for some insurance and insurance-like products sold to consumers who purchase and finance such products in connection with the purchase or lease of an automobile.

Passing the Compliance Test

by John Lovin

F&I Showroom

February 2015

The Consumer Financial Protection Bureau (CFPB) has not wavered in its belief that policies that allow dealers to mark up the interest rate on retail installment sale transactions creates a fair lending risk, with Toyota and Honda’s captive finance companies being the latest finance sources to be targeted. The attention dealer reserve is getting has caused some finance sources to limit rate participation, while others have eliminated dealer markups altogether.

This bureau’s activities have left dealers with a lot of unanswered questions: Is the CFPB coming after dealers next? If so, how can a dealership protect itself? If finance sources are pressured into eliminating rate participation, how will dealers make up for the lost revenue? Let’s examine these questions individually.

5 Trends to Watch in 2015

by Jim Henry
Automotive News
December 30, 2014

Here are five F&I trends worth watching as 2015 unfolds:

1. Political pushback on the Consumer Financial Protection Bureau (CFPB)
2. Stricter limits on dealer reserve
3. Lenders remain abundant
4. Captives step up oversight
5. Growing push to shorten F&I times