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Compliance F&I

Control is an Advantage with Non-Interest Income

Karen Klees, Certified Consumer Credit Compliance Professional

 

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

In a new world order of uber-competitive interest rates and shrinking profit margins, a significant number of lenders are supplementing revenues by promoting and marketing privately-labeled consumer protection products.  While still reeling from the implementation of formal compliance processes relative to financing, discussion has grown louder regarding FTC and CFPB involvement in the oversight of the sale of F&I products.

There are many elements to consider as you review your current policies and procedures for your existing product offerings.  On a positive note, having a suite of private-labeled products provides the ultimate control in pricing (and profit), and significantly more control in making sure your product offering passes the litmus test from a consumer perspective.

This being said, applying compliance standards and scrutiny to the partners you have chosen to be a third party administrator or insurer is growing in importance.  A recommended starting point, as you evaluate or re-evaluate product offering, is to ask a simple question:  Does the product’s benefits fulfill a real and mathematically calculable customer need (or have risk)?