Although the Consumer Financial Protection Board would like the indirect auto finance industry to move to a flat-fee structure, the industry is moving slowly to scrap the current discretionary pricing model and make the switch. Despite action by the CFPB to levy fines on Ally Financial Inc., BMO Harris Bank NA is one of the few that has announced it would move to a flat-fee structure. Because BMO Harris is a smaller company in this business, Ballard Spahr partner Christopher J. Willis does not expect the industry to follow its lead.

“The problem is there are extremely strong market forces that are in favor of this model,” said Mr. Willis. “The belief is to [switch to flat fees] is to surrender your market share to others who haven’t changed their model.”

The push by the CFPB to move to a flat-fee structure also has little support in the automobile dealership industry, which is not under its supervision.

Related Practices

Consumer Financial Services
Mortgage Banking