Back in April, the government issued this statement:
“The Consumer Financial Protection Bureau (CFPB) today released a bulletin clarifying that financial institutions under Bureau supervision may be held responsible for the actions of the companies with which they contract. The Bureau will take a close look at service providers’ interactions with consumers. It will hold all appropriate companies accountable when legal violations occur.
“Consumers are at a real disadvantage because they do not get to choose the service providers they deal with—the financial institution does,” said CFPB Director Richard Cordray. “Consumers must not be hurt by unfair, deceptive, or abusive practices of service providers. Banks and nonbanks must manage these relationships carefully and can be held accountable if they break the law.”
The bottom line is that the first targets for the bureau will be Big Banks, and according to this memo, their vendors and service providers. And, thanks to TV shows like “Lizard Lick Towing” and “Operacion Repo”, they certainly might suspect that most “unfair, deceptive and abusive” service providers are found in the repossession industry.
Its hard to find an example when the federal government intervenes in an industry and it turns out with a storybook ending. However if the CFPB sets the rules of the game, the legitimate brick-and-mortar repo agencies will come out ahead.
I was speaking with a friend in the transport business who picks up cars from service providers for the big forwarders (the ones working for the soon-to-be-targeted big banks). “These guys would never pass a site inspection”, my friend said, “most of these people don’t even HAVE sites!” If the CFPB inspectors check the actual end-provider of Santander’s repo supply chain, for instance, it would mean in some cases they’d be rustling through the glovebox of the repo man’s F550 to check his “filing system”, and stepping over cow-patties to inspect his “secured storage facility”.
Even the modest-sized industry-based forwarders (Summs Skip & Collection, Skipco, Transnet, TCAR, for example) would fare well if CFPB inspectors checked their vendor supply chain, because these industry-based forwarders tend to use “real” agencies, most of whom would easily pass muster with the bureau regarding data security and general “consumer protection” procedures.
I could be reading the tea leaves wrong (not the first time), but it would seem that the most effective way for the larger lenders to assure themselves that they are dealing with “safe” repossession service providers is to do continual “due diligence” inhouse, or use a forwarder that uses legitimate service providers.
It might spell the end of the era “cheap repo guy”….because legitimate service providers are the ones that are certified, have proper storage facilities, years of experience. And typically those are the best….but not necessarily the cheapest….
Is there a change in the wind? It won’t be long before we see……