Tag: Compliance

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EFG Companies

EFG Announces Number One National Ranking

– Automotive News lists EFG Client, Bob Moore Auto Group, as leader of top 25 U.S. auto groups-

bob moore logoEFG Companies, the innovator behind the award-winning Hyundai Assurance program, was recognized today by Bob Moore Auto Group as the foundational reason for their Automotive News ranking as the national leader in F&I revenue per retail unit (PRU) among the top 125 U.S. dealership groups.

The auto group not only carries a full portfolio of EFG’s F&I products, but also relies on the innovator for strategic services, such as compliance; reinsurance and risk management; sales and F&I training; F&I development; talent recruitment; pay plan development; full claims administration; and, technology services such as e-contracting and remittance.

“We truly value our strategic partnership with EFG, which has enabled us to offer our customers valuable products that protect them from the costs of unexpected vehicle repairs, and helps preserve the value of their vehicle over time, “said Curtis Hayes, Chief Financial Officer, Bob Moore Auto Group.   “EFG’s objective, professional counsel has enabled us to evolve and strengthen our business processes with innovative solutions and products, and their engagement model is not replicable by any other product provider, in my opinion.”

EFG built its reputation on delivering products that provide valuable protection to the consumer, fostering greater customer loyalty while increasing income opportunities for the dealer.  The company continues to raise the bar on delivering value to their clients.  Earlier this year, EFG was recognized as the only product provider of size to AFIP certify its entire field team.  The company was also awarded the Blue Seal of Excellence by the National Institute of Automotive Service Excellence – again, the only product provider to gain this recognition.

“Our engagement with Bob Moore Auto Group has pushed EFG’s innovation, and inspired us to set very ambitious targets that have translated into providing even greater value to our clients across the board,” said John Stephens, Senior Vice President of EFG Dealer Services.  “Many product providers go into dealerships with the number one goal of selling product, and secondary goal of serving as a strategic partner.  Our philosophy and model is just the opposite.  If we are providing valuable council and business insights that affect our clients’ entire operation, then the product production level should take care of itself.  I can tell you from having served as a general manager and general sales manager for more than 15 years that EFG’s model delivers an extremely unique value proposition to the client.”

EFG has additionally developed several proprietary technology platforms in its quest to be the most effortless and efficient third-party administrator in the industry.  Working directly with their clients, they have developed proprietary contract automation; online cancellation quoting and cancelling; and, the EFG’s Parts Wizard that identifies the highest quality parts from suppliers across the nation at the lowest price in real-time.  Its client portal, EFG DRIVE, is set to launch in Q4 of this year.

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Compliance EFG Companies

EFG First Product Provider to AFIP Certify Entire Field Services Team

-36-Year-Old Company Equips Dealerships to Address Critical Compliance Challenges-

 AFIP Certified Field Team logo
DALLAS, TX (April 22, 2014) EFG Companies, the innovator behind the award-winning Hyundai Assurance program, announced its status today as the first F&I product provider of size to certify its entire field services team with the Association of Finance and Insurance Professionals (AFIP).

By certifying its entire team at once, EFG makes it possible for its client base to receive the immediate benefits of the company’s certification, whether through mentoring the dealer’s staff through AFIP certification, one-on-one coaching or completing dealer compliance audits.

Founded in 1989, AFIP is the nonprofit, non-aligned sanctioning body for in-store sales and financial services personnel and select lender and aftermarket vendor personnel in the United States. AFIP certification curriculum focuses solely on the federal and state laws that govern in-dealership financial services.

AFIP2The retail automotive industry has always been one of the most highly regulated. With the recent increase in regulation oversight, non-compliance can create massive financial exposure for dealers, lenders, agents and vendors. “Our clients look to us to ensure that their teams have appropriate processes and controls in place to navigate more than a dozen federal laws and find their way through the many state and local laws that impact their operations,” said John Pappanastos, president and CEO, EFG Companies. “With that in mind, we took the initiative to get our entire field services team certified by the only regulatory compliance program that requires proctored exams under controlled testing conditions. Achieving AFIP certification across the entire team demonstrates our commitment to our clients.”

AFIP 1

According to David Robertson, executive director of AFIP, “AFIP’s primary objective is to protect 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. Regulatory knowledge, coupled with personal accountability, keeps thousands of dealers out of harm’s way.”

With its field team 100 percent AFIP certified, EFG’s client representatives, trainers and recruiters can more effectively train, audit and support their clients, who will continue to see compliance with state and federal regulatory requirements as a critical priority in their business moving forward.

Find out how EFG can secure your dealership to continue to thrive in the ever-changing compliance and regulation environment today.

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F&I Reulation

Are you frustrated with CFPB’s compliance guidelines?

Contributing Author: John PappanastosIf you attended NADA, or have simply been following industry news, you know that compliance is this year’s hot topic. In the first quarter of 2013, the Consumer Financial Protection Bureau (CFPB) threw a monkey wrench into standard auto financing practices, causing everyone to rethink the way they do business. They announced their intention to aggressively seek out lenders whose practices could be deemed discriminatory under Regulation B from the Equal Credit Opportunity Act (ECOA).

This regulation prohibits both intentional discrimination and practices that seem neutral but result in negative impact to customers in a protected class. According to the ECOA, customers could fall into a protected class based on their race, color, religion, national origin, sex, marital status, and age, among others.

While the CFPB stated that they would commence audits leading to legal action against lenders, their guidance bulletin left a lot to be desired. In essence, they instructed lenders to either:

  • eliminate dealer pricing discretion; or,
  • constrain dealer pricing discretion by monitoring dealership practices and using “controls” to force dealerships to adjust their practices.

Throughout the rest of 2013, lenders and dealers alike continued to ask for clarification on what those “controls” should be and for details related to the CFPB’s auditing process. Meanwhile, a consumer advocacy group in California began crafting a proposed ballot that would prohibit dealership interest rate markup practices altogether.  Almost a year has passed since CFPB made their initial statement with limited clarification and lots of industry frustration. Now, NADA has come out with guidelines on how dealerships can remain compliant. They also provide two options:

Option One

Establish a method of pricing loans where the establishment of finance income does not vary on a customer-by-customer basis. To accomplish this, dealerships would charge each customer a standard rate. This rate would either result from a flat fee or a fixed percentage of the amount financed paid to the dealership when lender presents their buy rate; or a fixed number of basis points over the wholesale buy rate established by the dealership.

While this option makes it very easy to remain compliant, it hampers the dealerships’ ability to offer competitive pricing, which also limits the customer’s ability to shop for the best value. For example, if a customer comes in and says they found better pricing elsewhere, the dealership may not be able to find a way to reduce the interest rate. What the CFPB does not take into account is that by trying to eliminate discrimination, they are actually taking away the competitive marketplace by necessitating that every dealership offer the same pricing to every customer, thereby eliminating the customer’s ability to shop for the best price.

Option Two

Start with Option One, by establishing a pre-set amount for the dealership’s finance reserve, such as with a fixed number of basis points over the wholesale buy rate. Then, allow for downward adjustments of that amount should a pre-determined condition occur, such as:

  • the customer is not able to make the monthly payment based on the preset amount;
  • the customer has a better offer somewhere else;
  • the dealer has a promotional offer extended to all customers;
  • the transaction is eligible to all customers for a lower interest rate from the manufacturer or other finance source;
  • the customer is eligible for a dealer incentive program; or,
  • the adjustment can be supported by documented inventory reduction considerations.

Option two gives dealerships more leeway to negotiate, but necessitates extensive dealership practices to ensure discrimination, as defined by the CFPB, is not allowed. What is keeping many dealers awake at night is that all transactions that deviate from the published policy must be recorded and documented – effectively “piling on” in terms of  the detailed work content already expected of their F&I department.

So how do you ensure compliance with Option Two?

First, it’s vital to have written compliance procedures. NADA provides an excellent template and information on how your legal department can craft a comprehensive procedures document for your dealership. In addition, standardized forms need to be created, documenting the dealership fee, conditions which allow for reduction of the fee, and the final dealership fee. Proper documentation is not only vital in explaining pricing disparities that might lead to potential violations; it also helps streamline the process, ensuring that these compliance practices do not lengthen the customer’s time in the F&I office.

It is also important to ask yourself:

  • Do my employees undergo formal compliance training at least once a year?
  • Do I monitor and document all training, forms and compliance efforts?
  • Do I have a compliance officer or department who is not in any way involved in Sales or the F&I office?

Keep these suggested guidelines in mind when you consult your legal counsel regarding your compliance initiatives. Implement a formal auditing process and accountability system for your employees. Consider the practices you already have in place and how they can better serve your compliance efforts with CFPB’s guidelines.

With over 36 years in innovating and implementing proven go-to-market strategies in the dealership space, EFG Companies understands the balance between ensuring complete compliance, and retaining and building profit margins. That balance lies in the value proposition. Which is why EFG structures its products and services to not only provide value to you, but also your customers. Our unmatched client-engagement model goes well beyond simple product innovation to mitigating liability through superior claims processes, and continuous training and auditing practices.