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Contributing Author: Steve Roennau Vice President Compliance EFG Companies

Contributing Author:
Steve Roennau
Vice President
EFG Companies

In January of this year, President Trump issued an Executive Order which required agencies like the Consumer Financial Protection Bureau (CFPB) to re-address how they issue new regulations. The order required agencies to eliminate two regulations each time they issue a new one. Because of this, we saw very little activity coming out of the bureau on issuing new regulations.

In addition, criticism of the CFPB reached a tipping point, forcing politicians to take a hard look at the powers granted the bureau. A good example of this is the Arbitration Rule that the CFPB tried to force through Congress in the third quarter. While the rule initially passed Congress, it was nullified by President Trump in November.

The latest news surrounding the bureau focuses on the change of leadership, as Richard Cordray stepped down from the position of Director. With the CFPB embroiled in internal politics, we can expect another year of limited activity. This is all great news for the automotive industry. However, it does not mean that the auto finance environment will return to the golden age of the 1980s. From an auto lender standpoint, it is no longer fiscally sound for them to undo compliance practices that are years in the making.

So what’s the plan for 2018? Essentially, stay the course! Ensure all your processes are documented. Documenting your processes does not have to cost thousands of dollars in attorney fees and man hours. In fact, it can be as simple as taking a process, like insurance verification, and writing down the steps your team takes to complete that process. You don’t need legal language. And, each process doesn’t need to be a 20-page document. It’s just writing down what you already do every day.

Utilize a compliance officer that has been trained under programs such as the Association of Finance and Insurance Professionals (AFIP). AFIP certification protects dealers by ensuring that in-dealership F&I practitioners and sales executives are fully aware of the applicable state and federal regulations, and take responsibility for their actions. It’s a good rule of thumb to AFIP-certify your entire F&I department, and assign a competent team member to serve as a compliance manager.

Train your employees on your compliance procedures and have processes in place to determine individual compliance. Remember, consistency is key. Maintain processes that make compliance part of the routine in your institution and conduct random compliance audits to ensure all processes are followed consistently by everyone. This should be done at least monthly. Lastly, focus on customer service. You’ll tend to find the dealerships that have the best CSI scores tend to also maintain strict compliance. The two practices simply go hand-in-hand.

Regardless of any legislative changes, compliance will continue to be in the spotlight in the coming years. Whether or not the CFPB functions under more strict parameters, we can expect a heightened level of oversight from the Department of Justice, the Federal Trade Commission, and consumer advocacy groups.

With more than 40 years of experience helping dealerships navigate the myriad of regulations affecting their business, EFG Companies knows what it takes to ensure profitable compliance. Contact us today to find out how our unmatched client engagement model, product innovation, claims procedures, and continuous training can take your dealership to the next level.

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