Nonbank auto-finance companies will face direct U.S. oversight for the first time under regulations published Wednesday by the Consumer Financial Protection Bureau.
About 34 firms that make, buy or refinance 10,000 or more car loans annually will be subject to CFPB supervision under the rules for “larger participants” in the market, the agency said in a statement. They include operations owned by auto manufacturers such as Toyota Motor Corp. and Ford Motor Co., and as a group originated 90 percent of non-bank auto leases and loans in 2013, the bureau said.
“Auto loans and leases are among the most significant and complex financial transactions in a typical consumer’s life,” CFPB Director Richard Cordray said in the statement. “Today’s rule will help ensure that larger auto-finance companies treat consumers fairly.”
Under the new rule, examiners will scrutinize whether lenders fairly market and disclose loan terms, treat consumers fairly in collecting debts and report accurate information to credit bureaus, CFPB said. They also will assess compliance with laws that guard against unintentional discrimination in lending, an issue that has proved controversial with banks.
The agency already supervises banks with assets above $10 billion that make auto loans.
The rule takes effect 60 days after publication in the Federal Register.