The powersports industry has been on a profitable roll for several quarters with the majority of dealers exceeding sales expectations. Low interest rates and a recovering economy bode well for strong revenue for the remainder of the year.
While revenues look strong, regulatory oversight is also building momentum. New leadership within the CFPB has signaled through their rulemaking agenda that automotive lending practices will garner increased scrutiny. New legislative bodies within state and local governments in many areas have followed suite to respond to discriminatory lending practices and perceived predatory consumer behavior.
Now, you may be thinking that you are insulated. After all, the CFPB has jurisdiction over lenders and Buy Here Pay Here Dealers, not you. It’s important to remember that under the Consumer Protection Act, state attorneys general can levy fines against retail auto and powersports dealers under the Federal Trade Commission. This means that your powersports dealership is just as likely to be hit with large fines as the auto dealership down the street. So, what can you do to protect your business?
Recently, I had a conversation with Shannon Robertson, the Executive Director of the Association of Finance and Insurance Professionals (AFIP) on that very question.
Key steps for regulatory compliance
Robertson agrees with experts at EFG on some key areas for dealer principals to evaluate, making sure the business does not risk expensive fines and regulatory scrutiny.
- Evaluate your product portfolio for ‘zero claim record’ products
- Manage website inventory to stay current and consistent with in-store pricing
- Implement NADA’s Fair Credit and Compliance Policy & Program to ensure consistent pricing on all products
EFG also recommends dealers implement the following practices to stay ahead of regulators:
- Name a compliance officer, or at least have a non-F&I manager ensure that compliance policies are in place and followed
- Conduct ongoing training to foster buy-in for consistent compliance within your team
- Audit your deals regularly to ensure compliance
According to Robertson, simply making an effort is key when it comes to compliance, and regulators have viewed efforts to maintain due diligence in a positive light. At the end of the day, it is a dealer’s responsibility to protect their business, their employees and their consumers. Failing to protect against fraud and compliance errors can cost your dealership in the long run, and can have long-term effects on your reputation as well.
You can listen to the full podcast interview for more actionable recommendations on what you can do right now to stay compliant.
EFG Companies is the leader in driving compliant profitability for its clients and works in partnership with AFIP to provide industry-leading compliance training. Contact us to learn more about how to protect your business.