Six days in New Orleans is enough for me. I am ready to get home. I've had more than enough shrimp, andouille, bourbon and Consumer Finance Protection Bureau. I hope you're not as tired of reading about the CFPB as I am writing about it but it is a looming threat to our business model and we must be vigilant.
I attended the AFSA meeting in New Orleans and listened to Patrice Ficklin, CFPB Fair Lending Director (I'll let you decide what that means), address a room full of automotive lenders. She told them that current dealer reserve system causes unfair lending issues. She did not tell them the methodology in deciding that.
She suggested that flat fees were only one example of an alternative she believes "there may be a variety of alternatives to discretionary markup". She offered no other example other than flat fees.
This lady is smart, has an agenda (one that is not favorable to dealers) and answers to no one (other than, perhaps, CFPB Director Richard Cordray). Citing bureau policy, Ficklin declined to answer media questions after her presentation.
It was none other than the Christopher Dodd, co-sponsor of the Dodd-Frank (which established the Consumer Finance Protection Bureau), who said "When the public's right to know is threatened, and when the rights of free speech and free press are at risk, all of the other liberties we hold dear are endangered."
While NADA continues to fight for the dealer reserve system, they have issued guidelines recommending each dealer set a standard interest-rate charge to borrowers, which could only be modified for specific reasons like a competing offer from another lender or dealer.
NADA will be offering this step-by-step program for dealerships of all sizes. While the program does not offer "Safe Harbor", it addresses the fair-lending concerns the CFPB has raised.
It strongly recommend that you look at it and consider whether or not it will work for you.
McConnell Takes Helm at NADA
Forrest McConnell, a Honda and Acura from Montgomery, AL, assumed the position of NADA Chairman in New Orleans. Forrest came on to the board the same time I did. He is smart, has agree at sense of humor and is an attorney. He will do a great job.
NADA Releases Additional ‘Dealer Data’ Guidance
NADA’s Legal and Regulatory Affairs department has issued a sample Service Provider Dealer Data Access Addendum (“Addendum”) and cover memo for dealers to use with their third party service provider vendors. This follows a memo sent last August from NADA Legal and Regulatory Affairs to all NADA members that contained an overview of the primary regulatory issues surrounding Dealer Data, numerous practical tips for dealers to consider when protecting their data, as well as samples of the contract provisions required under federal law when a dealer wishes to allow access to Dealer Data with a third party service provider.
The Addendum was drafted for dealers in an effort to clarify and simplify dealers’ obligation to ensure that their applicable vendor contracts contain certain provisions required under federal law. It’s only a sample, and should be used by dealers only after consultation with their legal counsel. Adoption of the Addendum is not the only way dealers can meet their legal obligations and it may not be right for every situation. However, dealers can choose to use the Addendum to amend their service provider legal agreements to satisfy the applicable contractual requirements. NADA is encouraging dealers to review the Addendum and cover memo with legal counsel, and if applicable, to present the Addendum to service provider vendors for signature.