By the Division of Banks
COMMONWEALTH OF MASSACHUSETTS
COMMISSIONER OF BANKS
MOTOR VEHICLE SALES FINANCE
COMPANY LICENSING AND
RETAIL INSTALLMENT SALES AND
SERVICES FINANCE COMPANY
Docket No. 2014-001
In the Matter of
d/b/a RECREATIONAL FINANCE COMPANY.
Motor Vehicle Sales Finance Company License No. MV0044
Retail Installment Sales and
Services Finance Company License No. RI0538
WHEREAS, RALPH CERUNDOLO d/b/a RECREATIONAL FINANCE COMPANY, Beverly, Massachusetts (Recreational Finance or the Company), a licensed motor vehicle sales finance company under Massachusetts General Laws chapter 255B, section 2 and 209 CMR 20.00 et seq. and a licensed retail installment sales and services finance company under Massachusetts General Laws chapter 255D, section 2 and 209 CMR 20.00 et seq. has entered into a STIPULATION AND CONSENT TO THE ISSUANCE OF A CONSENT ORDER (Consent Agreement) with representatives of the Division of Banks (Division) dated October 8, 2014, whereby, solely for the purpose of settling this matter, and without admitting any allegations or implications of fact or the existence of any violation of state or federal laws and regulations governing the conduct and operation of a motor vehicle sales finance company, Recreational Finance agrees to the issuance of this CONSENT ORDER (Order) by the Commissioner of Banks (Commissioner);
WHEREAS, an examination of Recreational Finance was conducted pursuant to General Laws chapter 255B, section 3 and chapter 255D, section 3 as of December 3, 2012 and continuing through July 17, 2013 to assess the Company’s level of compliance with applicable Massachusetts statutes and the Division’s regulations governing the conduct of those engaged in the business of a motor vehicle sales finance company and a retail installment sales and services finance company in the Commonwealth; and
WHEREAS, the Report of Examination (the Report) issued pursuant to the Division’s examination of Recreational Finance as of December 3, 2012 alleged substantial non-compliance with applicable state and federal statutes, rules, and regulations governing the conduct of those engaged in the business of a motor vehicle sales finance company and a retail installment sales and services finance company in Massachusetts.
NOW COME the parties in the above-captioned matter, the Division and Recreational Finance, and stipulate and agree as follows:
- Recreational Finance must develop, implement and maintain policies and procedures to ensure that the Company maintains an active vendor’s single-interest (VSI) insurance policy so long as it assesses and collects premium amounts from consumers as disclosed on the retail installment contract. Recreational Finance must further develop, implement and maintain policies and procedures to ensure that the Company properly remits premium amounts obtained from consumers for vendor’s single-interest insurance as disclosed in the retail installment contract, in accordance with the Division’s regulation 209 CMR 32.04(4)(b).
- Recreational Finance must review its records to determine the most recent date when a valid VSI policy was in place with a qualified independent insurance company prior to April 1, 2013. Recreational Finance must provide a copy of this policy to the Division, as well as copies of any other relevant documents evidencing the effective dates of this policy.
- Recreational Finance must conduct a review of all accounts originated between the termination date of the VSI policy identified under section (a) and the effective date of the current VSI policy, April 1, 2013. The Company must identify the VSI premium collected from each borrower. The Company must reimburse all borrowers from whom a VSI premium was collected without being remitted to a qualified independent insurance company.
- Within thirty (30) days of the effective date of this Order, Recreational Finance must submit to the Division evidence of all reimbursements issued pursuant to this Section of the Consent Order. Evidence of reimbursements issued must include the consumers’ names, account numbers, the amount of reimbursements and the manner in which the reimbursements were calculated, and sufficient evidence to illustrate the credits and/or refunds to each consumer.
- Recreational Finance agrees to submit a payment in the amount of twenty five thousand dollars ($25,000.00) in satisfaction of an administrative penalty collected in consideration of the fact that the Company did not remit vendor’s single interest insurance premium amounts collected from consumers, from at least March 12, 2010 until March 31, 2013, to a qualified independent insurance company.
- Payment in full of the amount indicated above, payable to the “Commonwealth of Massachusetts,” must be submitted with the executed copy of the Consent Agreement, to the Division of Banks, Attn: Consumer Finance Examination Unit, 1000 Washington Street, 10th Floor, Boston, Massachusetts 02118.
- Recreational Finance must develop, implement and maintain policies and procedures to ensure that the Company refrains from collecting repossession fees on accounts prior to the repossession of the collateral securing the account.
- Recreational Finance must develop, implement and maintain an effective compliance management system including but not limited to adequate oversight of the Company’s compliance program by the owner and senior management with sufficient resources dedicated to the administration of the compliance program. The compliance program must include adequate policies and procedures, effective internal monitoring on an ongoing basis, sufficient training to ensure management and employees are familiar with statutory and regulatory requirements. An effective compliance management system must also include periodic independent testing of Recreational Finance’s programs and operations with sufficient scope and depth to determine whether the Company is operating in compliance with applicable consumer protection requirements.
- Within thirty (30) days of the effective date of this Order, Recreational Finance must engage an independent compliance consultant (Compliance Consultant) to augment the Company’s compliance management system. The scope of the Compliance Consultant’s engagement must include the review and verification of all corrective action required in response to the deficiencies identified in the Report and as required by this Order. The scope of the Compliance Consultant’s engagement must also include a review of the Company’s existing compliance management system, including policies and procedures, internal monitoring, training, and management oversight of the compliance program. The scope of the Compliance Consultant’s engagement must include periodic independent testing of transactions to verify the effectiveness of the Company’s internal controls. A copy of the engagement letter for the Compliance Consultant must be submitted with the response to this Order. The Compliance Consultant must submit a copy of any reports issued to Recreational Finance in connection with this engagement directly to the Commissioner.
- Recreational Finance must address and correct all violations and areas of concern as specified in the Report.
- Within thirty (30) days of the Company’s receipt of the Report, Recreational Finance must submit to the Commissioner a written response that addresses each of the violations specified in the Report. The written response must describe the revised policies and procedures adopted by Recreational Finance to implement all corrective actions set forth in: (i) the “Examiner’s Comments and Conclusions” section of the Report and (ii) the provisions of this Order.
- Recreational Finance must comply with all laws and regulations applicable to its conducting the business of a motor vehicle sales finance company and a retail installment sales and services finance company in Massachusetts, including, but not limited to, Massachusetts General Laws chapter 255B, Massachusetts General Laws chapter 255D, Massachusetts General Laws chapter 140D and the Division’s regulation 209 CMR 20.00 et seq.
- On the thirtieth day after the end of each calendar quarter following the date of this Order, Recreational Finance shall furnish written progress reports to the Division, which will address and include the following:
- A description of the form, content, and manner of any actions taken to address each Section of this Order and the results thereof; and
- Written findings prepared by Recreational Finance detailing a review of management’s and staff persons’ adherence to the policies, programs, and procedures adopted pursuant to this Order and to applicable statutes, regulations, and rules, as well as a description of any operational changes implemented during such quarter which are intended to improve Recreational Finance’s compliance condition in Massachusetts, and the results thereof.
- The reporting requirement to the Division referenced in Section 8 of this Order will remain in effect and must not be amended or rescinded without the prior written modification, termination, or suspension of the applicable provision of this Order from the Commissioner.
- Nothing in this Order will be construed as permitting Recreational Finance to violate any law, rule, regulation, or regulatory bulletin to which the Company is subject.
- In consideration of the foregoing Order, the Division agrees not to pursue formal measures, relative to this matter, to suspend or revoke Recreational Finance’s motor vehicle sales finance company license under General Laws chapter 255B, section 8 or retail installment sales and services finance company license under General Laws chapter 255D, section 8 relative to this matter, while this Order is in effect.
- Failure to comply with the terms of this Order will constitute grounds for license suspension and/or revocation pursuant to applicable provisions of the General Laws of the Commonwealth of Massachusetts.
- This Order will become effective immediately upon the date of its issuance.
- The provisions of this Order will become binding upon Recreational Finance and its owner and officers and/or directors, and their successors or assigns.
- The provisions of this Order will remain effective and enforceable except to the extent that, and until such time as, any provisions of this Order will have been modified, terminated, suspended, or set aside by the Commissioner or upon an order of a court of competent jurisdiction.
- This Order and the Consent Agreement are the complete documents representing the resolution of this matter and shall supersede and replace all previous agreements between the Division and Recreational Finance. There are no other agreements between the Division and Recreational Finance.
BY ORDER AND DIRECTION OF THE COMMISSIONER OF BANKS.
Dated at Boston, Massachusetts, this 8th day of October, 2014
David J. Cotney
Commissioner of Banks
Commonwealth of Massachusetts