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EFG Companies Featured

Northwood University and EFG Companies Join Forces to Shape Future Retail Automotive Leaders

northwood_university_logoNorthwood University and EFG Companies, the innovator behind the award-winning Hyundai Assurance program, announced today a national partnership to drive greater opportunity and development of tomorrow’s retail automotive leaders. 

Under this new agreement, EFG and Northwood University will pave the way for future generations to leverage the hard-fought learnings of today and evolve business practices to successfully navigate the changing dealership landscape of tomorrow.  These two award-winning organizations will host thought leadership forums, develop specialized continuing education programs, conduct joint industry research, and cross-publish content.  Northwood University has also granted EFG Companies a seat on its National Automotive Marketing Advisory Board to represent the Finance & Insurance sector of the automotive industry.

“During this time of increased compliance oversight and economic recovery, it is imperative that we provide the auto retail industry with individuals equipped with leadership capabilities, and who can analyze current market trends to evolve their business for future success,” said Keith Pretty, President and CEO of Northwood University. “Our partnership with EFG Companies adds to Northwood University’s ability to prepare our students for a career in this critical U.S. industry.”

This partnership will allow both organizations to leverage the experience and knowledge of Northwood University’s dealer alumni, and EFG’s national dealer network for the benefit of the university’s student base.  As the industry continues to rapidly evolve, this essential think tank will help drive innovation and cultivate adept leaders to challenge the retail auto industry to new levels of growth and profitability.

“Since 2008, the industry has gone through rapid, and, at times, painful change,” said John Pappanastos, President and CEO of EFG Companies. “The Great Recession forced dealers to significantly improve their operations, adopt new technologies and become much more analytical. There is no question that dealers today face an entirely different level of complexity than previous generations. Our partnership with Northwood will help our future industry leaders tackle growing issues like the evolving sales processes, the optimal management of digital assets, the increasing role of consumer protection products in the dealership profit model, and heightened regulation.”

Both the EFG leadership team and the Northwood University faculty will provide input and guidance to ensure that Northwood students experience the continued benefit of the most relevant and thought-provoking retail automotive curriculum available in the U.S.  In addition, EFG will provide internship and employment opportunities within its franchise dealer base as students seek to apply their classroom experience to the real world.

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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.