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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. However, it is no longer a fiscally sound or viable idea to return to the auto lending practices of yesterday.

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.

For this reason, it’s important that you foster a collaborative compliance platform for your dealer partners. Ask yourself:

When discussing compliance with a dealer, do I ask about their compliance goals and best practices? Or, is the discussion more of a lecture on how I expect dealers to comply with my compliance goals?

The path forward in compliance is by cultivating a dialogue with dealers on how to work together towards shared compliance goals.

The last thing any lender wants is a combative relationship with their business partners. For this reason, I highly suggest that lenders get out and have proactive discussions with dealers around how they can work together. Just as your team needed compliance training, so do dealers. Help put them in touch with compliance training courses that will better enable dealers to maintain compliance and profitability.

The more you work with your dealers during this time to keep your relationships strong and create a more compliant atmosphere overall, the better off you will be when the compliance pendulum swings back again. In addition, if you help dealers address the paradox of profitable compliance, how much more likely do you think it will be for them to consider you a top lender for their business?

And, have you recently checked to make sure your own house is in order? Ensure all your processes are documented. Utilize a compliance officer that has been trained under programs such as the National Auto Finance Association. 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 on at least a monthly basis. Lastly, focus on customer service. You’ll tend to find the institutions that have the best customer service tend to also maintain strict compliance. The two practices simply go hand-in hand.

With more than 40 years of experience innovating and implementing go-to-market strategies in the dealership space, EFG Companies understands the balance between ensuring compliance and differentiating your business in today’s competitive market. That is why EFG structures its products and services to provide value to you, your dealership partners, and the end-consumer. Contact us today to find out how our unmatched client engagement model, product innovation, claims procedures, and continuous training can take your institution to the next level.

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