The New York Times recently sought the perspective of the American Financial Services Association (AFSA) on a Consumer Financial Protection Bureau (CFPB) review concerning auto financing practices. AFSA expressed concerns about the CFPB's approach to categorizing errors in the industry.
AFSA stated, "The CFPB is quick to categorize errors as though they are malicious, intentional … or profitable. This mischaracterization is not helpful to consumers, lenders, or regulatory bodies and is not accurate."
According to AFSA, the CFPB perpetuates an inaccurate image of the vehicle industry by suggesting that lenders have financial incentives to repossess vehicles. AFSA clarified that repossession occurs only after prolonged non-payment and efforts by lenders to offer alternative repayment options.
AFSA also highlighted concerns about potential negative impacts of strict regulatory actions on genuine errors or unfortunate timing. They noted, "if regulators come down too heavily in instances of genuine error or unfortunate timing, it actually creates a disincentive for a lender to be as consumer friendly as it works to be."
A scenario was presented where a borrower fails to make payments and does not respond to notices until notified of repossession. In such cases, AFSA believes that this could be deemed an "illegal" repossession by the CFPB.
AFSA warned against creating solutions that might inadvertently encourage quicker repossessions by creditors. They emphasized that such outcomes do not benefit either lenders or borrowers and urged for fair treatment from the CFPB towards both parties involved.