Categories
Compliance

2015 Compliance 101

Print Friendly, PDF & Email

Karen Klees, Certified Consumer Credit Compliance Professional

 

Contributing Author: Karen Klees, Certified Consumer Credit Compliance Professional, EFG Companies

2015 is here and the CFPB is keeping up the pressure on compliance regulation. Everyone is wondering what the year will look like. Will more lenders implement flat rates? Will the CFPB find a way to extend their influence into the F&I space? Will Congress step in and impose restrictions on the CFPB? With so much up in the air, dealerships and lenders alike are waiting with baited breath to see what 2015 has in store.

As your new year’s resolution, focus on and hone your lending institutions operations by focusing on the following:

  • Developing a robust compliance management system;
  • Managing complaints; and,
  • Understand the role your vendors play in compliance.


If a compliance audit were to hit tomorrow, do you have a system in place to demonstrate all the different ways your institution is following the letter of the law? Smart lenders are augmenting their compliance management system in 2015, taking into account all the possible scenarios that could play out throughout the year. Whether you are implementing flat fees, or working with your dealership partners to find a different solution to eliminate the potential for discrimination, it’s vital that you have all the necessary processes in place to document compliance.

Discuss a go-forward plan with your legal team. Consider sending your compliance manager(s) to extra training this year and utilize their take-aways within your institution. This same training could serve as the basis for regular round-table discussions with your colleagues and vendors on best practices.

One important aspect of this system is how you address complaints. As we’ve seen in previous years, institutions like the CFPB and FTC direct their focus based on consumer complaints. So, it’s important that you manage them before they get the attention of the government. Beyond that, studies continuously show that customers are more likely to remain loyal to a brand that successfully remediates complaints. And, we all know it’s a lot easier and less expensive to keep a customer than it is to get a new one. Here are four simple steps to successfully address complaints:

  1. Act quickly – have the processes and communication plans in place to address a complaint as soon as it is brought to your attention.
  2. Take accountability – demonstrate to the customer that you hear and understand their issue, and are willing to work with them to resolve the situation.
  3. Empower employees to make a fast decision – designate employees that have authority to take action. Whether that’s issuing a refund, or simply explaining the terms of a contract, those employees should have the ability to do what they feel is necessary.
  4. Dissect your compliant data – Look for trends so you can correct repeat issues at their root to eliminate further complaints.

If a complaint is posted online, on a social media platform, or in a complaint forum, the best way to address it is to take the conversation offline. Ask for the customer’s contact information or provide yours to demonstrate cooperation. Once the complaint is resolved, post your resolution summary, and ask the customer to either update their complaint or take it down.

Another vital part of your compliance management plan needs to include your vendor relationships. Work with your attorneys to insure that your vendor contacts include compliance requirements to protect yourself from liability for their actions. These relationships include everyone from your dealerships to your repossession vendors and collections agencies. Every vendor that a lender works with needs to have their own compliance processes in place, as their actions have the potential to directly affect a lender’s standing with the CFPB. Impress upon them the importance of working with you to ensure everyone is covered as far as compliance is concerned.

With current vendors, discuss how your compliance processes can merge with theirs to create a cohesive unit. As far as your dealership partners are concerned, move beyond simply sending them a letter every time you see a discrepancy, and sit down with them to discuss how they can act as an extension of your institution. Stay competitive by being willing to work with them, and offer them different options to increase their profit.

These options could include a different compensation model, or even including complimentary F&I products on your loans, giving them the option to upgrade to increase their profit. Dealers are willing to work with you as long as you are willing to work with them.

This year, make cohesion your goal as far as compliance is concerned. Work with your employees to implement a documentable compliance management system that includes a strong complaint management process. Determine what part your vendors and dealership partners play in that system and be willing and available to work with them to ensure they see the benefits of working with you.

With almost 40 years of experience in helping dealerships and lenders achieve new levels of profitability, EFG Companies knows how to put dealerships and lenders on the same page when it comes to maintaining F&I compliance and increasing profit. EFG’s heavy investments in customer service training, customer service awards and certifications, and processional certifications like AFIP, provide our clients the security in knowing they have a partner that is with them every step of the way. Contact us today to expand your horizons for compliant profitability.