Following a request from NADA, the Federal Reserve Board has proposed temporarily exempting motor vehicle dealers engaged in indirect (three-party) vehicle financing transactions from a new, comprehensive data collection and reporting requirement that is scheduled to take effect July 21, 2011.
Section 1071 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 requires financial institutions, including motor vehicle dealers, to inquire into whether a credit applicant is a small business or a women-owned or minority-owned business and to maintain a record of responses to the inquiry that is separate from the credit application. If the applicant responds to the inquiry, the financial institution must then:
- Compile and itemize eight fields of data related to the credit applicant and the credit requested,
- Retain the data for a period of three years,
- Submit the data to the federal government on an annual basis, and
- Make it available to the public upon request.
Section 1071 imposes additional requirements, such as ensuring that the collected information does not identify a person connected with the business credit applicant.
The Board proposal, if adopted, will temporarily exempt motor vehicle dealers covered by the dealer exclusion from the authority of the new Consumer Financial Protection Bureau (set forth in section 1029 of the Dodd-Frank Act) from the duties imposed by section 1071 until the effective date of final regulations explaining those duties.