Unlike a college student scrambling to submit an assignment on time, there doesn’t appear to be much turbulence in the auto finance space since the larger participant rule from the Consumer Financial Protection Bureau went into practice on Monday.

Previously, the bureau supervised auto financing at the largest banks and credit unions. Now, this rule extends that supervision to any nonbank auto finance company that makes, acquires or refinances 10,000 or more loans or leases in a year.

The CFPB announced this move back in June, and National Automotive Finance Association executive director Jack Tracey indicated the agency made little changes, if any, to the protocol.

Under the rule, those companies will be considered “larger participants,” and the bureau may oversee their activity to ensure they are complying with federal consumer financial laws, including the Equal Credit Opportunity Act, the Truth in Lending Act, the Consumer Leasing Act, and the Dodd-Frank Wall Street Reform and Consumer Protection Act’s (Dodd-Frank Act) prohibition on unfair, deceptive or abusive acts or practices.

The CFPB estimated that it will have authority to supervise about 34 of the largest nonbank auto finance companies and their affiliated companies that engage in auto financing.

“Monday is sort of a non-event because I think the companies have been trying to comply and do everything the CFPB has wanted them to do much before this,” Tracey told SubPrime Auto Finance News. “I don’t think there’s any apprehension or concern on the part of the larger participants that Monday will change anything.”

David Missimer, general counsel for Automotive Compliance Consultants, took a similar stance.

“Non-bank auto finance companies falling under the umbrella of the Consumer Financial Protection Bureau's larger participant rule will, for the most part, be in position to respond to CFPB supervisory initiatives come (Monday),” Missimer said.

“The majority of auto finance companies were aware such a rule would be implemented long before the official rule was announced,” he continued. “Certainly there has been a flurry of activity, creation and refinement of compliant processes, and in consultations with law firms well versed in the examination process since the rule was announced.

“There will be a few companies unprepared, but the majority have been working hard to get their houses in order for expected CFPB examinations,” Missimer went on to say.

Both Tracey and current NAF Association president Mark Floyd acknowledged the dynamics could change if the CFPB chooses to make further regulatory modifications or more finance companies are placed under the bureau’s microscope.

When asked about how prepared finance companies are now that the “larger participant” rule is in effect, Floyd said, “That’s difficult to know until these companies actually undergo examinations by the CFPB. 

“I’m confident that all of the companies take the CFPB’s oversight seriously and are doing their best to comply with the new regulatory environment we face in our industry,” continued Floyd, whose vast industry experience includes leading AmeriCredit as well as the overseeing of Exeter Finance, where he previously served as chief executive officer and currently remains a board member.

“Although the agency has recently published its examination procedures, these procedures could be subject to interpretation as they’re applied to actual situations.  It’s a developing process and only time will tell how well-prepared various finance companies are,” Floyd went on to say.

A copy of the rule can be found here.

The examination procedures for auto finance can be found here.