Covering Developments at the CFPB
The November 2025 issue of F&I Sentinel’s Industry Insights brings critical coverage of the Consumer Financial Protection Bureau (CFPB), where activity is currently defined by two significant trends: a high-stakes jurisdictional debate over who the Bureau should regulate and an ongoing legal battle concerning the agency’s internal stability. For auto finance executives, these developments underscore the uncertain but intensely scrutinized federal regulatory environment.
Stakeholders Clash over Indirect Auto Lender “Larger Participants” Definition
A significant focus revolves around the ongoing debate regarding the CFPB’s supervisory reach into the indirect auto lending market. In August, the CFPB initiated a public comment period to gather input on whether it should adjust the threshold used to determine which indirect auto lenders qualify as “larger participants” subject to its supervisory authority.
The current rule dictates that indirect auto lenders originating 10,000 or more loans annually are designated as “larger participants.” The CFPB sought input on whether this standard remains appropriate. The public comment period generated 15 public comments, including submissions from the American Financial Services Association (AFSA) and a group of attorneys general (AGs).
The responses reveal a sharp division between industry advocates and state regulators.
State Regulators’ Position
The attorneys general from 18 states and the District of Columbia urged the CFPB to maintain the existing 10,000-loan benchmark or raise it only minimally. They argued that raising the threshold significantly would weaken consumer protection efforts and could result in many subprime indirect auto lenders being excluded from federal oversight.
The Industry’s Position
Conversely, AFSA called for the rule to be entirely scrapped. AFSA argued that the CFPB lacks the necessary statutory authority to supervise indirect auto lenders. Furthermore, the association contended that existing mechanisms—including state regulation, enforcement tools and market competition—already provide sufficient consumer protection.
“The proposed nonbank revisions could result in states picking up oversight to fill gaps left by the change in direction from the CPFB, leading to regulatory fragmentation.”
— Truth Headlam, Auto Finance News 10/29/25
For auto finance executives, this disagreement emphasizes the escalating tension between state regulators aiming for stronger oversight and industry groups seeking to restrict the scope of federal involvement.
Legal Fight Intensifies over En Banc Hearing in CFPB Shutdown Case
Also in play are legal challenges impacting the structural integrity of the CFPB. On September 29, plaintiffs—led by unions representing CFPB employees in the federal DC circuit—requested an “en banc” hearing. This extraordinary request aims to prevent the planned downsizing of the bureau.
This action was taken in response to an August 15 order issued by a federal appellate court tentatively dissolving the preliminary injunction by a district court judge in late March. This original injunction had restricted CFPB leaders from taking numerous actions, such as dismissing staff (unless for cause), terminating contracts, or deleting records.
Plaintiffs’ Arguments
In their request for the en banc hearing, the plaintiffs argued that the courts do possess the right to review agency actions under the APA, even if those actions have not been formally recorded or announced. They also reiterated their fundamental claim that attempts by a president to eliminate an agency established by Congress are unconstitutional.
The Impending Decision
The ultimate decision to grant the en banc review rests collectively with all active judges in the federal DC appellate court. This decision will be made despite the administration’s opposition filed on October 21. Adding to the urgency and political tension, Russell Vought, the Acting Director of the CFPB, stated during a podcast on October 15 that he and others are actively working toward closing down the bureau.
F&I Sentinel continues to closely monitor all developments at the CFPB and their interrelated effects. Read our latest Regulatory Watch for more important industry updates happening this month.
If you are interested in learning about the impacts on your F&I product servicing operations, connect with F&I Sentinel to schedule a no-obligation meeting with a member of our Concierge Compliance Team today.
The information provided in this post does not, and is not intended to, constitute legal advice; instead, all information, content, and materials referenced are for general informational purposes only. Readers should contact their attorney to obtain advice with respect to any particular legal matter.
