by Keishawn Batts, VP of Business Growth
Election Results Likely to Result in Increased Scrutiny of Lending Practices: Is Your Organization Ready?
For much of the past year, many lenders, servicers, and financial institutions have operated in a regulatory environment marked by uncertainty and relative quiet at the federal level. I believe many have taken the quietness in Washington DC as an opportunity to breathe a little after the intense scrutiny that lenders had been facing under prior administrations.
It appears after Tuesday night that that period may be ending.
With Democrats now controlling both the Senate and House, the consumer credit industry should prepare for a significant shift in regulatory priorities. For organizations that finance, administer, market, or support F&I products, this is not the time for a “wait and see” approach. It’s time to revisit compliance programs, dealer oversight, product governance, and monitoring controls.
The reason is simple… political control drives regulatory agendas.
A Democrat-controlled Congress will have the authority to set committee priorities, launch investigations, issue subpoenas, demand company records, and place industry practices under intense public scrutiny. We expect renewed focus on consumer pricing, household debt, credit reporting, collections, ability-to-repay standards, and the sale of optional products.
For lenders involved in the financing of vehicle service contracts, GAP waivers, ancillary products, and other F&I offerings, that scrutiny may be particularly intense.
The CFPB Is Poised for Funding
Perhaps the most significant development for the financial services industry is the likely attempts that will be made to rebuild and expand the reach of the Consumer Financial Protection Bureau (CFPB).
While recent years have been marked by efforts to reduce the agency’s authority, staffing, and scope, a unified Democratic Congress will certainly look to reverse course. Industry observers increasingly expect lawmakers to look to strengthen the CFPB’s authority, expand enforcement resources, and accelerate rulemaking activity that had been slowed or deprioritized. Setting the Bureau up for a blitz come 2028 if the Democrats retake the White House.
The expectation across Washington is not merely an assurance of the preservation of the CFPB, but revitalization.
And for lenders, administrators, and F&I providers, it’s important to remember that the Bureau has already shown us where its attention is likely to be focused. Prior CFPB examination findings identified compliance concerns involving optional products, including failures to properly identify product payees in TILA disclosures and practices that created unnecessary barriers for consumers seeking to cancel add-on products and obtain refunds. In one notable finding, examiners determined it was abusive to require consumers to make repeated trips to a dealership simply to cancel an add-on product and receive a refund.
These findings are particularly relevant because they touch many of the same areas that have long been under scrutiny within the F&I industry: product disclosures, consumer consent, cancellation processes, refund administration, and oversight of dealer sales practices. A fully funded CFPB, with a different captain at the helm, would have greater resources to revisit and expand examination activity in these areas.
That could mean:
- Increased examination activity
- Expanded enforcement resources
- New rulemaking initiatives
- Greater scrutiny of lender-dealer relationships
- Renewed focus on UDAAP enforcement
- Increased oversight of add-on and optional products
For many organizations, the compliance controls built to satisfy yesterday’s regulatory environment may not be sufficient for tomorrow. The organizations best positioned for a revitalized CFPB will be those that proactively review their disclosures, cancellation and refund processes, dealer oversight programs, and optional product compliance controls now, before regulators come calling.
Optional Products Will Be Back Under the Microscope
If lenders believe attention on F&I products has faded, we urge you to think again.
Just weeks before the Trump administration moved to halt many CFPB supervisory, enforcement, and regulatory activities, the Bureau issued a Special Edition of its Supervisory Highlights focused on auto finance. In that report, regulators specifically identified add-on products, also known as optional or ancillary products, as an area presenting significant consumer risk and stated their intention to continue monitoring the marketplace. Regulators cited concerns ranging from consumer consent and disclosures to cancellation rights, refund administration, and product value.
In other words, the CFPB did not move away from these concerns because they were resolved. The agency’s review of optional products was already underway before political efforts temporarily shifted the Bureau’s direction.
Now is the time.
The industry has already witnessed growing scrutiny surrounding GAP waivers, vehicle service contracts, cancellation practices, disclosures, refund processing, and dealer sales conduct. Regulators, state and federal alike, have increasingly made it clear that lenders can, and will, be held accountable not only for their own actions, but also for the conduct of dealers, administrators, and third-party partners.
If a revitalized CFPB emerges under a Democratic-controlled government, many of these same issues are likely to return to the forefront, most likely with greater urgency. In both chambers of Congress, we expect renewed pressure on pricing practices, fees, household debt levels, credit reporting, collections activity, and the sale of optional products. Lenders involved in the financing of ancillary products should anticipate increased scrutiny around disclosures, consumer consent, refund administration, product value, and oversight controls.
Adding to the pressure, Senator Elizabeth Warren (D-MA), who is expected to play a leading role in banking oversight, has repeatedly identified consumer financial practices as an area of concern. That signals a broader appetite for investigations, hearings, and oversight across the consumer finance ecosystem.
For lenders, the message is clear: regulators will increasingly ask not only whether products were compliant on paper, but whether organizations maintained effective processes to monitor, audit, and correct risks before consumers were harmed. The organizations that invest in stronger compliance controls today will be far better positioned when tomorrow’s regulatory questions arrive.
The CFPB Risks Are Familiar
History shows that when regulatory attention increases, enforcement actions often follow.
The organizations most vulnerable are not necessarily those intentionally violating regulations. More often, they are institutions operating with outdated compliance controls, inconsistent dealer oversight, incomplete documentation, lack of visibility, weak refund processes, or insufficient monitoring of third-party relationships.
Those gaps can remain hidden during periods of limited enforcement. They become far more visible when regulators begin issuing document requests, conducting examinations, and reviewing consumer complaint data.
The Cost of Waiting Could Be Expensive
Many organizations postponed compliance investments while regulatory priorities appeared unsettled. That may prove to be a costly mistake.
Now is the time to evaluate:
- F&I product compliance controls
- Dealer monitoring and exception reporting
- Cancellation and refund compliance
- Consumer disclosure and consent practices
- Administrator and third-party oversight
- Audit documentation and regulatory preparedness
- Complaint trends and emerging risk indicators
The lenders best positioned for the next regulatory cycle will not be the ones reacting to investigations. They will be the ones demonstrating that compliance was already embedded into their operations.
State Regulators May Become an Even Bigger Force
While much of the attention following the election has focused on Washington, lenders should not overlook what happened at the state level.
This week’s election resulted in Democratic victories in several governors’ races, including Georgia, Texas, Ohio, Iowa, and Nevada, while Democrats also gained control of additional state legislative chambers and strengthened their position in a number of state governments. In fact, Democrats now hold a majority of governorships for the first time in more than a decade.
For F&I providers, lenders, and servicers, the significance goes beyond party politics. State Attorneys General, banking departments, insurance regulators, and consumer protection agencies often serve as some of the most active enforcement bodies in consumer finance.
While a divided federal government can sometimes create legislative gridlock, state-level enforcement does not operate under the same constraints.
Industry observers have noted that Democratic Attorneys General have historically been among the most active participants in consumer finance investigations and enforcement actions, with a particular focus on F&I products. With Attorneys General races flipping in Georgia, Iowa, Ohio, and Texas, lenders should anticipate continued scrutiny of practices involving optional products, disclosures, refund administration, collections activity, and pricing transparency.
For those unfamiliar with the organization, the Democratic Attorneys General Association, DAGA for short, always holds a policy conference immediately following the November election and that is no different this year with the group meeting on November 18 and 19. While the CFPB has been relatively quiet for the last two years we have seen increased scrutiny on auto finance by Democrat attorneys general, and that will only increase now as the playbook from those traditional Democrat Attorneys General will be handed over to the newly elected Democrat Attorneys General in Georgia, Iowa, Ohio, and Texas where they will have the full support of a Democrat Governor.
For organizations operating across multiple states, the compliance challenge becomes even more complex. Instead of preparing for a single federal standard, lenders may find themselves navigating a patchwork of state-level directives, investigations, and regulatory expectations. This along with what will certainly be an active roster of Attorneys General could mean significant headaches are ahead without a clear and comprehensive compliance management system in place for the traditional areas of scrutiny we have seen.
Affordability Could Become the Next Compliance Battleground
Another trend worth watching is the growing political focus on affordability.
Many newly elected state leaders campaigned on reducing costs for consumers, including expenses related to vehicle ownership, insurance, lending, and household debt. As affordability concerns continue to dominate consumer conversations, regulators and lawmakers may increasingly examine the total cost of vehicle ownership and financing.
That could translate into greater scrutiny of:
- Ancillary and optional product pricing
- Product value disclosures
- Insurance-related products
- Fee transparency
- Consumer consent practices
- Refund administration processes
For lenders and F&I providers, this represents an important shift. Historically, compliance discussions have focused primarily on technical regulatory requirements. Going forward, regulators may increasingly evaluate whether products deliver clear consumer value and whether consumers fully understood the costs associated with their purchase decisions.
A New Regulatory Chapter Is Beginning
Regardless of political views, the election results create a new reality for consumer finance organizations. Increased oversight, a strengthened CFPB, congressional investigations, and renewed focus on optional products are no longer hypothetical possibilities. They are emerging risks that deserve immediate attention.
For lenders involved in F&I products, now is the time to assess your compliance framework, identify vulnerabilities, and ensure your organization is prepared for what’s next.
Because when regulatory scrutiny returns, compliance gaps that seemed manageable yesterday can quickly become tomorrow’s headline.
Your Opportunity: Now is the ideal moment to conduct a compliance health check before enforcement activity accelerates. Organizations that proactively review their F&I programs, dealer oversight controls, refund processes, product forms, and monitoring practices today will be significantly better positioned to navigate the heightened regulatory environment expected tomorrow.
The question isn’t whether regulatory scrutiny will increase. The question is whether your compliance program will be ready when it does. We’re happy to review your account or hear your organization’s needs and discuss how F&I Sentinel can help you prepare.
Connect with one of our compliance experts for a complimentary review of your current F&I compliance framework.
