There is heavy speculation in the automotive industry that F&I managers are going to come under heavy examination from the Consumer Financial Protection Bureau, which was recently established as a result of federal finance-reform legislation. Even though automotive dealers are exempt from the new reform legislation, the resulting regulations will still have an affect on automotive dealers.
The Consumer Financial Protection Bureau is the federal agency charged with enforcing the regulations brought on by the financial reform legislation and the assumption is that they will be closely monitoring the automotive industry. So what does this all mean to you? More than likely, there will be some procedural changes in your F&I department. Compliance experts are encouraging dealers to videotape F&I meetings with customers (with their permission in writing) to avoid misunderstandings that can lead to litigation. The new regulations also focus on the confidentiality of the customer’s personal information, so office doors and filing cabinets should be equipped with locks, if not already. Some other areas to be scrutinized are excessive spot deliveries, payment packing, the transparency of the terms of gap and credit insurance, whether or not the IRS is being notified of all transactions over $10,000 and whether or not fees and interest rates are actually below prime levels.
David Robertson, Executive Director of the Association of F&I Professionals, is urging dealerships to update their F&I departments sooner rather than later and retrain as necessary.
Feel free to contact a member of our automotive dealership group for more information on how to comply with the new financial regulations that can affect your F&I department.