June 10, 2015

CFPB will oversee large nonbank auto financers

CFPB announced Wednesday it has published a rule allowing the bureau to oversee larger nonbank auto finance companies for the first time. The rule applies to companies making, acquiring or refinancing 10,000 or more loans or leases in a year.

CFPB noted that consumers have $900 billion in outstanding auto loans, making auto loans the third largest household debt category behind mortgages and student loans.

CFPB Director Richard Cordray said, "Auto loans and leases are among the most significant and complex financial transactions in a typical consumer's life." He said the bureau's rule will help ensure fair treatment for consumers. In conjunction with this final rule, the bureau also updated its Supervisory and Examination Manual to provide guidance on how the bureau will monitor the bank and nonbank auto finance companies that it supervises.

The rule was originally proposed in September 2014 and will take effect 60 days after its publication in the Federal Register. NAFCU staff are studying the rule and the guidance for its potential impact on credit unions and will continue to monitor the bureau's involvement in auto lending supervision.