Category: Compliance

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Compliance

Compliance: Not Dead Yet

Contributing Author: Steve Roennau Vice President Compliance EFG Companies
Contributing Author:
Steve Roennau
Vice President
Compliance
EFG Companies

Sighs of relief turned into sighs of frustration this past December when the Department of Defense (DOD) issued a new interpretation of the Military Lending Act (MLA), potentially resulting in severe implications for all dealers who sell or have sold vehicles to active duty members of the U.S. armed forces and/or their dependents.

It seems that even the holiday season can’t put the brakes on compliance initiatives. As of December 14, 2017, creditors providing credit-related products and services, like GAP, Credit Life, Credit Disability or cash-out financing, must now comply with a full range of duties and restrictions imposed by the MLA. While this interpretation didn’t go into effect until December, it applies to all transactions going back to October 3, 2016.

Dealers are now spending the first month of the new year consulting with their legal counsel to determine whether to continue to offer such products and services to active duty military consumers and their dependents, and if so, what actions must be implemented to comply with MLA requirements.

History of MLA

Congress passed the MLA in 2006 to help protect active duty service members and their dependents from predatory lending. Since 2015, the DOD has been slowly amending the final rule to expand the scope of the MLA to include the majority of closed and open-ended loans.

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Compliance

2017 CFPB Round Up

Contributing Author: Steve Roennau Vice President Compliance EFG Companies
Contributing Author:
Steve Roennau
Vice President
Compliance
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. This is all great news for the automotive industry. However, it does not mean that the auto finance environment will return to the golden age of the 1980s. From an auto lender standpoint, it is no longer fiscally sound for them to undo compliance practices that are years in the making.

So what’s the plan for 2018? Essentially, stay the course! Ensure all your processes are documented. Documenting your processes does not have to cost thousands of dollars in attorney fees and man hours. In fact, it can be as simple as taking a process, like insurance verification, and writing down the steps your team takes to complete that process. You don’t need legal language. And, each process doesn’t need to be a 20-page document. It’s just writing down what you already do every day.

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Compliance

F&I Compliance Training

Contributing Author: David Robertson, Executive Director, Association of Finance & Insurance Professionals
Contributing Author:
David Robertson, Executive Director, Association of Finance & Insurance Professionals

One Size Doesn’t Fit All

Watch a couple of TV programs and you’ll likely catch at least one commercial for an online college degree. The boom in online training is true for our industry, as well. Given the emphasis on formal dealership CMSs, the ranks of online training providers are growing.

E-training can be a cost-effective and convenient instructional tool. However, it’s not a one-size-fits-all proposition.

Online training with self-testing – as a standalone method – appears to be conducive to human resources, occupational safety and administrative procedures. Areas where the focus is directed inward – the implementation of task-specific directives by individual employees.

F&I activities, on the other hand, are directed outward. In addition to the practitioners themselves, other people are key components of the compliance equation. Chief among them are hundreds of prospective customers, as well as funding source paper-buyers, aftermarket product service reps – and sales managers and vehicle sales personnel.

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