Santander has been told by the Federal Reserve to increase its oversight of subprime auto lending.
In an enforcement agreement released yesterday (Mar 25), Santander has been given two months to put together a plan that will make sure that all levels of the bank’s staff are instructed and ready to improve the bank’s compliance with federal consumer protection laws.
This latest action is one of many the bank has faced over the last two years.
It is not yet clear which consumer protection laws Santander is specifically accused of violating, though the agreement did highlight reports from other federal agencies that had previously cited Santander for not following the consumer protection rules appropriately.
Santander has not been fined, though Patrick Rohan — a managing director of bank consulting firm FinPro Inc. and former director of supervision in the Boston region for the Federal Deposit Insurance Corp. — told the Boston Globe that fine or not, the issue must be fairly serious to elicit the notice from the Fed.
The bank, through spokeswoman Ann Davis, noted that it has been working diligently for the last 18 months to strengthen its practices.
Auto lending is big business for Santander — it is $38.5 billion of the bank holding company’s $137 billion in assets. Recently, new polices have been put in place to identify deal misconduct. Santander has also created an Officer of Consumer Practices to ensure that customers are treated fairly.
“The work necessary to address the new agreement is well underway and will not require a significant change to our plans,” Davis said.
The agreement is the latest in a string of regulatory actions that Spain’s Banco Santander has faced here in the states.
The Office of the Comptroller of the Currency downgraded the bank’s rating in community lending earlier this year.