Tips for Monitoring Dealer Compliance, from Auto Finance Excellence.
Monitoring the behavior of another company and its employees may seem difficult, but with the right data and tracking, it’s easier than you might think.
Like other lenders that make loans through automobile dealers, Pelican Auto Finance LLC is required by theConsumer Financial Protection Bureau to monitor how its 5,000 dealers in 27 states treat their deep-subprime customers. In particular, the CFPB wants to make sure that all borrowers with similar characteristics pay the same price for cars and the same interest rates on loans.
Monitoring dealers is a key focus of the CFPB’s edict on lenders, who, unlike dealers, are regulated directly by the agency. “The CFPB looks to us to be a policeman,” says Joel Kennedy, Pelican’s chief operating officer and chief compliance officer. “The states look at it that way, too. We have to treat [dealers] as an extension of ourselves in order to protect our business.”
The first step in the process is to “apply a great deal of diligence when we on-board the dealer and agree to purchase loans from them,” Kennedy says, adding that “you have to think about ways that could go wrong.” Specifically, lenders must make sure their dealer partners are properly licensed and have solid policies and procedures.