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Dealership Training EFG Companies F&I

CFPB Crackdown – What You Need to be Compliant

Contributing Author: John StephensIn December 2013, the Consumer Protection Financial Bureau’s first blow to the automotive financing industry hit – and it hit hard. After an in-depth investigation, the CFPB ordered Ally Financial to pay $80 million in consumer restitution and another $18 million in civil penalties for having practices that made discrimination possible in their partner dealerships.

According to some consumer advocates, those dealership partners could now be sued by the same consumer’s receiving a refund check from Ally Financial. Why? Consider this situation.

Sally checks the mail one day and receives a letter stating that the lender backing her auto loan was forced to reimburse her and others who were discriminated against when purchasing their vehicle. She now has proof that the dealership where she purchased her vehicle employed discriminatory practices against her. With hard proof in the form of a check from Ally Financial, she contacts a lawyer and puts together a class action with all the other consumers the dealership allegedly discriminated against.

Now, another blow is about to hit. A consumer advocacy group in California is trying to place a proposal on the state’s November 2014 ballot that would prohibit dealerships from marking up interest rates on their auto loans. If this bill passes, it could provide the tipping point for lenders to change their policies and disallow dealerships from increasing their interest rates.

With the industry avidly watching to see how this will play out, now is the time to ensure the highest standard of compliance practices in your dealership. So ask yourself:

Do you have a compliance officer at your dealership? A compliance officer takes ownership of dealership compliance. They are responsible for the compliance strategy or business plan, determining holes, and the best and most efficient way to plug those holes.

How often do you provide compliance training? Automotive retail has always been a high turnover industry. Compliance training needs to be at the forefront as you add new employees, promote, and add new rooftops, etc. If your people don’t know the ever-fluctuating rules, how can they ensure they are abiding by them?

Do you perform regular compliance audits? By performing regular audits, you can be on top off inconsistencies within your dealership and address them before they get out of hand.

With this highly regulated industry, compliance is nothing new. However, the vague guidelines from the CFPB leave a lot to be desired in forming hard- and-fast rules. The best thing to do is consult with your legal counsel to ensure that your compliance strategy incorporates practices relative to the CFPB and general discriminatory laws. Some examples of these practices include:

  • Establish a published internal and external audit process that includes specific guidelines on the consequences of compliance violation.
  • Publish a schedule of training for both new and veteran employees to ensure all personnel are aware of the established guidelines.
  • Provide evidence of proper consumer disclosure.
  • Establish a “code of ethics” reviewing the policies and procedures signed off by all employees and new hires.

In addition, it is equally important to conduct thorough due diligence that all service providers, not just lenders, understand and are capable of complying with all state and federal laws by:

  • requesting and reviewing the service provider’s policies, procedures, internal controls, and training materials to ensure that the service provider conducts appropriate training and oversight of employees or agents who have consumer contact or compliance responsibilities;
  • ensuring the contract with the service provider includes clear expectations about compliance, as well as appropriate and enforceable consequences for violating any compliance-related responsibilities;
  • establishing internal controls and on-going monitoring to determine whether the service provider is in compliance; and,
  • taking prompt action to address any problems identified through the monitoring process.

With over 36 years in innovating and implementing proven go-to-market strategies in the dealership space, EFG Companies has made compliance a core facet of their business, influencing everything from product development to claims and client support.

Find out how compliance training from EFG can fortify your business to thrive while remaining compliant with current and future regulations.

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Agency Services EFG Companies

3 Tips to Insulate Your Agency from Dealership Consolidation

Contributing Author: Paul RobersOver the past three years, market consolidation in the retail automotive space has been a trend that has continued to gain momentum.  For example, in 2011, Penske Automotive owned 166 franchises in the U.S. and today, that number has grown to 173. Large, privately-held dealership groups have rapidly acquired rooftops across the country throughout 2012 and 2013. As the economy continues to recover and people return to purchasing cars, it stands to reason that dealership consolidation will continue to escalate.

As a dealership agent, you are probably focused on what this means for you. You have probably felt the sting, or know someone who has, when one of your dealership clients gets bought out by one of the large dealership groups. Unless, that dealership group uses your services, you automatically lose that business.

It might be tempting to fall prey to the idea that there’s nothing you can do about this. You have no control over dealership consolidation. But, there is something you can do. In fact, there are three definitive actions that can make a difference.

Diversification

While it’s true you have no control over which dealerships groups like AutoNation, Penske or any of the other large dealership group take over. You do have control over your own business. So how do you insulate your business from consolidation? It’s simple. Always be diversifying.

When business is soaring, it’s easy to sit back and enjoy the fruits of your labor. However, it’s better to always assume this time will end all too quickly. Don’t get tied down with simply servicing your clients. Every client has a lifespan. While servicing your clients and maintaining relationships is important, it’s equally important to always work to expand your business.

Network

You’ve secured a client and established relationships with the top brass. However, while the dealer principal and GM are important, lower-level employees could provide inroads to future business. While servicing that client, you also need to fortify relationships with other sales managers, F&I directors, and general employees. You never know when lower level employees will become decision-makers and you want to have positive relationships built up by the time they reach the top. In addition, it’s important to maintain contacts when employees leave their current dealership for those same reasons.

Be a Problem Solver

You do this every day for your current clients. Why not do it for prospects? When researching prospective clients, do your due diligence in identifying areas where they can improve operations and incorporate them into your presentation. Mystery shop their store. Review their website. Submit an online inquiry and evaluate their follow-up practices. Look at their online reviews. Determine the strength of their social media presence. When you call them, use your research and ideas to have something interesting to say. The dealership personnel will be more intrigued to see what you have to offer and how you can make them more successful.

Dealership consolidation will only continue to grow. The best way to fortify your business is to focus on your expansion opportunities, as well. At EFG Companies, we have over 36 years of experience servicing agents and dealerships across the U.S.  With our industry insight and client engagement, our agent clients receive valuable tools, insights and strategies to face their unique challenges. Unleash your growth potential with EFG. Contact us today.

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EFG Companies

Product Administration can Make or Break Your Repeat Business

Contributing Author: Barry CarterCongratulations! Your VSC penetration is up and so is your F&I income. Your F&I department is rocking on upselling consumer protection products with your vehicles. You can’t believe the success you are having with sales and F&I. Your customers are happy all the way until they leave the dealership and drive home. But guess what, their experience with you hasn’t ended.

Because your customers choose your F&I products, their experience with those products will reflect back on you. You can have the greatest closing numbers in the world, but if your F&I products don’t reflect the service you provide in the dealership, your customers will most likely not return for their next purchase.

Good experience with an F&I product goes beyond claims paid to the customer service provided to both your customers and your service center. Think on your own experience with call centers. The ones you hate are the ones that keep you on hold too long, don’t address your questions, or keep transferring you between departments. Good customer service includes answering phone calls immediately, listening to customer concerns, and answering all questions politely. This experience is often even more important than monetary matters. When looking at your product administrator, look beyond the number of claims paid and average amount paid to the customer experience. Ask yourself:

  • How quickly are calls answered?
    • Anything over 60 seconds is unacceptable.
  • What is the average call time?
    • There is an art to a good service call. It shouldn’t end too quickly, leaving the caller more confused, and it shouldn’t linger. Good adjusters or customer service representatives move the conversation along efficiently and end the call between 3 minutes and 5 and a half minutes.
  • How often are calls abandoned?
    • If more than 5% of callers hang up, there’s a problem.
  • What is the average availability of a service representative or a claims adjuster?
    • This affects everything else. Without at least 75% availability, calls will not be answered promptly, therefore more will be abandoned.
  • Is it easy for my customers to get answers to frequently asked questions, such as policy coverage or claim status?
    • These should be available in a number of places, such as online, within the administrators automated phone system, and in print form.

It’s pretty easy to tell whether your customers are having a good experience with your F&I products by just walking into your service center. If your team members are complaining about never getting through to the administrator to initiate a claim, get a status, or get payment, it’s likely that your customer is having the same poor experience. One conversation you never want to hear is:

Service Advisor: “We couldn’t process your claim with your product administrator.”

Your Customer: “I bought the car through you, what do you mean you can’t process my claim?”

Service Advisor: “It’s not us, it’s the product administrator.”

Your Customer: “I can’t believe this service! I’m never bringing my car here again and you can be sure I won’t buy from you again either!”

The best way to avoid the scenario above is to ensure a good customer experience from the day they purchase their car. With over 36 years in innovating and administering consumer protection products, EFG knows the importance of customer service and that our efforts reflect back on our clients. That’s why we perform monthly audits based on daily results to ensure that your customers and service advisors always have the best experience. We continuously strive to keep abandon rates below 5 percent, answer every call within 60 seconds and to provide answers or process a claim as quickly and efficiently as possible.

At EFG, your reputation is our business. Contact us today to find out more about our commitment to your success through product administration.