Passing the Compliance Test, from F&I Showroom.
The current regulatory environment demands that dealers take a good hard look at their processes and policies. F&I pro offers some recommendations.
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.
Question 1: Is the CFPB coming after dealers next?
In December, the CFPB fined DriveTime Automotive Group $8 million for making harassing debt-collection calls to its customers and for providing inaccurate information to the credit bureaus. Other than that, the bureau’s primary focus has been on dealer participation policies, but there is chatter the bureau could turn its attention to F&I product sales.