Channel | Industry

Compliance: How to Keep It Simple

In spite of what the fearmongers are telling your dealers, agents can help ensure compliance — and get buy-in from managers — by breaking it into its components.
By: Steve Roennau

Compliance: How to Keep It Simple

I get lots of phone calls from dealers and agents bemoaning the challenges of compliance. One recent phone call echoed a common theme: “I’ve been in business for 20-plus years, and I couldn’t understand half the things that regulator was saying about compliance! And, if I was struggling, imagine how my team feels. Why is everyone just spewing compliance jargon without providing me any real, actionable advice?”

The funny thing is, compliance does not have to be that hard! It actually can be relatively simple. Yes, there are some legal aspects involved which should not be ignored. But those can be explained in three-syllable language.

Unfortunately, there are entities in the marketplace who prefer fearmongering to solid education. If your external compliance resource can’t explain the ins and outs in a manner that can be easily understood, then maybe you should question the resource — not the rules they are trying to explain.

The other type of question I get frequently reflects this high level of fear in the industry. The dealer or agent on the other end of the line conjures images of Big Brother when asking about compliance regulations. “Well, my trainer said we could all go to jail if that document wasn’t in the folder!”

Yes, there are serious repercussions to flagrant compliance failings. But a single mistake on one deal does not necessarily equal a trip to the penitentiary. Again, creating a climate of fear, uncertainty and doubt does no one any good. It calls into question the entity distributing the doom.

So is compliance really that simple? My answer is always yes — if you follow sound business practices and have a compliance process and culture in place that works for you, your agency and the dealers you serve.

Start from the Beginning

Let’s look at compliance from a standpoint of common sense. First, evaluate how your various dealer clients handle deals.

  • Are all deals finalized with all the correct paperwork the first time?
  • Are all consumer notices and signatures taken care of when the customer is in the dealership?
  • How many deals submitted to accounting are actually fundable?
  • Are all deals filed in secure locations, behind closed doors and locks?
  • How are dead deals processed?

Once you have this baseline, you can easily identify areas of improvement. There are a lot of details involved when it comes to compliance requirements. But not every team member needs to be an expert — nor do you want them to neglect their primary responsibilities.

Consider designating a compliance manager for dealerships that have at least 10 employees or a compliance lead for those that have fewer than 10 employees. A compliance manager’s role is to have an intimate knowledge of all of the requirements and to guide other team members.

Work with your newly appointed compliance managers and compliance leads to create processes for each department that clearly guide team members through the necessary tasks. And, yes, your dealers should document all their processes, not just their regulatory processes.

Of course, there are so many processes that are simply just part of the routine, and many dealers haven’t conceptualized how to define them beyond “Just do it.”

Just as with any big project, think about tackling this effort one easy bite at a time. Start with the checklist on the deal jackets. Define and write down the process behind each item on the list. Each process should consist of three components: what you do, why you do it and how you do it.

No one is asking dealers to all abide by the same processes, rather to simply write them down. Every dealership has their own way of doing things and that is perfectly fine, as long as it is compliant.

By taking the time to document, train and audit your dealers’ processes, they will be set up to complete all the tasks in a vehicle purchase the right way, the first time. This results in saved time and in creating a better experience for the customer. The last thing you want is for your team to come across as unprofessional, and that is exactly what happens when they make statements that start with “Oh, by the way …” or “Can you come back?”

Allow a short period of time for each department to review those processes. Encourage team member feedback during the review period. These processes will ensure that all tasks are performed the same way — regardless of which team member is performing the task.

Stay on the Straight and Narrow

Once the documentation is complete, don’t put it in a drawer to be easily forgotten. Keep your documentation visible and accessible.

Granted, there will be mistakes. Get back to the task by enforcing compliance. Remember, establishing compliant practices protects consumers, the dealership and individual employees from any potential legal repercussions. During the process review period, discuss appropriate actions for process violations. Be sure to include those actions in the process documentation.

Implement a deal checklist and train your dealers’ teams to make sure every item is checked before sending any deal to accounting. By empowering managers to take ownership and accountability for their deal documentation, you have the potential to save 30% of their teams’ time to focus on increasing dealership profitability rather than compliance paperwork. Holding F&I managers accountable also gives you greater control in making sure all deals are finalized in a compliant manner.

Train ’Em Right

It can be tempting to simply “check the box” when it comes to compliance processes and employee training. However, having no ongoing goals leads to lack of accountability and missteps. When investing the time, money and energy into compliance, it’s imperative that you build in a measure of accountability through training and ongoing engagement.

This starts with leadership support. For any training to be truly effective, dealership leadership must fully support the training content and methodology. Discuss with managers where their teams can improve and what they want to see change. Then communicate those end-deliverables to the trainer.

Securing management input will help increase leadership buy-in and result in tracked improvement measures and long-term success. Understanding and effectively communicating your desired outcome will put you and the trainer on the same page and ensure the training content, methodology and delivery is in line with your needs.

Lastly, management should participate in the training whenever possible. This will serve three purposes:

  • It will provide an opportunity to inspect what you expect, i.e. answering the crucial question: “Is training delivering what I expected it to deliver?”
  • It sends the message to employees going through the training that it is important for all levels of leadership. When management supports training outside of the classroom with benchmark setting, one-on-one sessions and progress tracking, they will set the standard of accountability for all team members.
  • It demonstrates to regulators that all levels of management take full accountability for your compliance efforts.

With the right training, processes and documentation, compliance should become a part of everyday work activities. Does every person on your team understand their role? From the person at the front desk to the service bay new hire, compliance is everyone’s responsibility. By keeping it simple, everyone can implement a compliance mindset.

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- has written 1 posts on Agent Entrepreneur.

In his compliance leadership role at EFG Companies, Steve utilizes his extensive industry experience to provide EFG clients a sophisticated analysis of their current compliance procedures and proactively prepare them for upcoming changes in federal and state regulations. Steve is an AFIP Senior Certified Professional in Financial Services, and has developed compliance training modules in the areas of Adverse Action, Privacy Rule, Risk-Based Pricing/Exception Notice, Red Flag Rule, Safeguards Rule, Deceptive Practices, and Federal and State Regulations. In addition, he has conducted several compliance courses, including: Compliance Workshop for Dealership Managers; AFIP Prep Course for F&I Producers; and, F&I Compliance Training for F&I Producers. Steve’s background in driving bottom-line results in F&I, sales and product management gives him strategic insight into the compliance hurdles facing both dealers and lenders. His experience includes consulting for Chrysler’s Five Star initiative, where he developed their training curriculum, conducted program pilots, and certified instructors. Steve has developed and delivered national training for Chrysler Capital, Santander Consumer USA, Hyundai, General Motors, Ford, Mitsubishi, Volkswagen, and numerous dealer groups throughout the country.

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