U.S. consumer watchdog widens oversight on auto financing

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The top U.S. consumer protection regulator is expanding its oversight to include large non-bank auto financing companies.

A new rule issued on Wednesday by the Consumer Financial Protection Bureau means that companies such as Ford and Toyota which operate lending arms that make, acquire or refinance 10,000 or more loans or leases per year will be subject to CFPB compliance exams.

To date, the regulator’s reach on auto financing only extended to banks and credit unions with $10 billion or more in assets.

“Auto loans and leases are among the most significant and complex financial transactions in a typical consumer’s life,” said CFPB Director Richard Cordray.

“Today’s rule will help ensure that larger auto finance companies treat consumers fairly.”

The rule takes effect 60 days after it is published in the Federal Register.

The CFPB, Washington’s newest financial regulatory watchdog, was created by the 2010 Dodd-Frank Wall Street reform law to protect consumers from predatory lending practices.

The bureau said it expects to gain authority over 34 of the largest nonbank auto finance companies in the United States, which collectively originate about 90 percent of the nonbank auto loans and leases.

As part of the new regime, CFPB examiners will be monitoring non-bank auto lenders for compliance with rules governing fair marketing and disclosures, rules requiring them to provide accurate information to credit bureaus, fair lending practices, and rules that aim to protect consumers from unfair debt collection tactics. (Reporting by Sarah N. Lynch.

 

 

 

[“source-reuters.com”]