Dealership advocates said that even if the dealers had been granted an exemption last year from more stringent federal oversight of consumer financing, they should still be cautious of an agency that has more authority over dealer-assisted loans.
As part of the government agency revamp, the U.S. Federal Trade Commission got streamlined rule-writing authority. This means that the agency has an easier time of establishing standards.
Last April, the FTC started to gather dealership-finance information in a roundtable composed of dealer advocates, consumer activists and state regulators. Consumer activists asked for a flat fee to replace interest-rate markups on car loans.
Meanwhile, others aimed for an improved FTC enforcement of government ban against dealer abuses. Several dealer advocates expressed their worries that that those requests might be granted. Dave Robertson, executive director of the Association of Finance & Insurance Professionals, said that the worst-case scenario would be that the apprehensions would lead to more regulation.
The FTC has yet to disclose its intent but Robertson is concerned that the commission will suggest flat fees instead of rate markups. Robertson added that possible FTC proposals may include a flat fee of $100 to $150 a transaction or a ceiling on interest rates.
The National Automobile Dealers Association couldn’t be sure of what will happen to the commission. NADA spokesman Bailey Wood said that it’s better to ask FTC directly; however FTC lawyer Ronald Isaac said that no decisions have been made.