CFPB Provides Guidance On Auto Finance Data Pilot – Consumer Law

On February 23, the CFPB issued market-monitoring orders to nine large auto lenders to provide
information about their auto lending portfolios. According to the
CFPB, auto finance market has seen significant change in recent
years, resulting in larger loan amounts and higher monthly payments
for consumers. As part of monitoring the auto loan market for
consumer risks, the CFPB is collecting auto lending data, and
issued these orders to the auto lenders to provide certain
information about their lending portfolios as part of collecting
such data.

The nine auto lenders chosen represent a cross-section of the
auto finance market and the CFPB’s goal is that the data
collected from their responses will help build data that grants
insight into lending channels, loan performance, and potential
future data collection efforts.

Prior to this collection process, the CFPB met with various
market participants, regulatory agencies, Federal Reserve
officials, market analysists, and consumer researchers to gather
input on how to best move forward. These meetings helped to
identify three areas where participants found that data visibility
would be important:

• Lending Channel Differences: collect data that differentiates
  whether a consumer secures financing on their own through direct
  lending, or indirectly arranged through the dealer;




• Data Granularity, Consistency, and Quality: collect data that
  is more complete and centralized across lender types and
  stakeholders; and




• Loan Performance Trends: collect consistent and granular data
  on delinquency trends as they relate to geography, credit score,
  and income.

The CFPB states that the overall response it has received thus
far from all interested parties it has consulted is that the
current data landscape is insufficient and will take time and
deeper analysis to piece different data points together, but the
result of such findings, alongside greater transparency, would lead
to a better auto lending market.

Putting it into Practice: These orders are the
latest in a series of prior marketing monitoring orders issued by
the CFPB to participants in the BNPL space and technology companies
operating payments systems (see our previous blogs posts on these
orders here and here). Based on the latest orders, auto
finance companies should expect some agency action in the form of
market trend and consumer impact reports that will likely serve as
a precursor to potential regulatory inquiries, exams, or
investigations. Auto lenders should expect a particular focus
increase in auto loan delinquencies, particularly for low-income
consumers and those with subprime credit scores.

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guide to the subject matter. Specialist advice should be sought
about your specific circumstances.