For the second time in less than two years, the Federal Reserve has issued an enforcement order against Santander Holdings USA that requires the Boston company to strengthen its oversight of its embattled subprime auto lending unit.
The Fed said Thursday that it had issued the order because Santander Holdings — the U.S. division of the Spanish banking giant Banco Santander — has not made sufficient progress complying with a previous enforcement action, issued in July 2015.
“Santander Holdings has begun to take, but has not yet completed, all necessary actions to comply with the 2015 written agreement,” the
Under the terms of the latest order, Santander Holdings must submit a plan for keeping closer tabs on compliance and operations at Santander Consumer, its Dallas-based auto lender.
Santander Consumer, meanwhile, must also take a range of steps to enhance its risk-management policies and procedures. Those steps include clearly articulating its procedures for escalating emerging risks through the chain of command, ensuring the board of directors stays informed.
Santander Consumer must also improve the information and data it provides to senior leaders regarding of the violation of consumer laws, among other compliance risks.
“We will continue to enhance our risk management framework to ensure we address regulatory concerns and expectations,” said Raschelle Burton, a spokeswoman for Santander Holdings, in an emailed statement. She noted that the issues raised in the latest Fed order stem from the 2015 agreement.
“The work necessary to address the new agreement is well underway and will not require a significant change to our plans,” Burton said.
The enforcement order does not impose new capital restrictions on Santander Consumer, according to Burton.
The order adds to a long list of headaches for Santander Consumer — and, by extension, its parent company.
The auto lender has been the target of numerous state and federal investigations, including an ongoing
Santander Consumer last year was also tripped up by accounting woes. The company restated its financial results several times,
Over the past year, Santander Consumer has made a number of changes to its board and senior managers. In July 2016, Blythe Masters
Scott Powell, CEO of Santander Holdings,