Tag Archive | "Automotive Compliance Education"

New F&I Compliance Certification Offered by American Financial


THE WOODLANDS, Texas – A new F&I compliance certification has been introduced to the industry by Automotive Compliance Education, LLC (ACE). The ACE certification program was developed by industry-leading attorneys to help set and maintain professional standards at dealerships. This training program takes the rigorous and complicated federal regulations that touch different parts of the dealership, and digests it into logical doses. The online training modules also show how the regulations relate to everyday situations in the dealership. From Reg Z, to Red Flags, to ECOA, ACE certification ensures that all who complete the program can take that knowledge and confidence back to the business office and apply it immediately.

It is important for business managers to become ACE certified as the process of obtaining this certification helps to raise the industry standard of F&I professionalism and education. ACE understands that the automotive industry and regulations are always evolving. For that reason, annual re-certification is part of the program. ACE certified F&I professionals will be responsible for maintaining this new standard by taking an annual review module and exam. This process includes any significant regulatory changes that may have occurred in the previous year. Like other professional licenses, such as an insurance license, this certificate will recognize automotive professionals and their adherence to ethics, industry education, and professionalism on an ongoing basis.

American Financial & Automotive Services, Inc. has partnered with ACE to provide the ACE certification through its award-winning F&I University (FIU). As the Dealers’ Choice Diamond Level winner in Compliance Training and the Platinum Level winner in F&I Training, American Financial believed this unique opportunity with ACE was a natural partnership. Aligning compliance certification and F&I training creates an even stronger program for F&I professionals that will take their career to the next level. FIU already provides an industry-leading F&I curriculum and online continuing education to provide dealerships increased opportunities and revenue. By implementing ACE certification into the current curriculum, FIU has solidified their commitment to compliance and F&I training to the industry. Not only will business managers walk away from the intensive F&I school with innovative techniques to take back to the business office, they will also walk away with an ACE F&I compliance certificate that will set them apart as professional leaders in ethics and compliance.

FIU is the only F&I school to offer ACE certification in an instructor-led format. When business managers leave the five-day F&I school being ACE certified, they will bring back assurance to the dealership and its customers. Prove your dealership’s commitment to compliance and F&I by getting your team ACE certified today!

Please visit www.AFASinc.com for more information about FIU and to register for the F&I school.

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How to Formalize a CMS


In the beginning, there was General Motors Acceptance Corporation (GMAC) and the emergence of indirect auto finance. The Treaty of Versailles was signed around the same time, ending World War I. A typical GMAC deal file was the title and a contract too small to fit in today’s standard printer tray.

That innocuous beginning ultimately begat numerous federal regulations to oversee the dealerships who funnel installment sales contract to GMAC’s successor and other finance sources. As the genesis of the Federal Trade Commission (FTC) pre-dates GMAC by five years, it ultimately became the primary overseer of dealership business practices. Ergo the FTC Used Car Rule, the FTC Safeguards Rule, etc.

Jump ahead nearly a century and witness the birth of the FTC’s little brother, the Consumer Financial Protection Bureau (CFPB). The CFPB jumped into our consciousness in 2011 as a reaction to the mortgage lending meltdown. Its charter is similar to the FTC’s charter — to be the consumer’s watchdog.

Sibling Rivalry

Just like a little brother, the CFPB wants to prove it belongs in the same conversation as its big brother. An aggressive compiler of consumer complaints of all thing financial, it recently logged its millionth consumer complaint in a short five years.

And although the CFPB was unable to wrestle oversight of car dealerships away from the FTC, there is no questioning the agency’s intent to regulate dealerships though the wormhole known as the finance sources that dealers sell contracts to.

The CFPB has awakened its big brother with a series of headline-grabbing actions. For example, the FTC recently announced payment packing and yo-yo charges against nine California dealerships, its first such charge levied against an auto dealer for yo-yo transactions. Unconfirmed rumors have the first yo-yo transaction taking place in California in about, oh, 1920.

This is an important development for agents and dealers to pay attention to. It signals the willingness of the FTC to accept and adopt some of the CFPB’s methods and processes and ideologies.

One potential, very significant future event is the development and implementation of a compliance management system (CMS). The CFPB requires the finance sources it regulates to have a formalized, documented CMS in place.

My prediction is the FTC will require auto dealerships to have a formalized, documented CMS in all areas of the dealership’s operations in the next handful of years. As an agent, you have the opportunity to put your dealer clients on the path to compliance today. Let’s take a closer look at the components of a CMS and how to formalize the system.

Components, Audits and Procedures

A compliance management system is the method by which a dealer manages the entire consumer compliance process. It includes both the compliance program and the compliance audit function.

The compliance program consists of the policies and procedures which guide employees’ compliance with laws, regulations and potential litigation defense.

The compliance audit function is an independent testing of the dealer’s transactions and processes to determine its level of compliance with consumer protection laws and internal policies and procedures.

The process to develop and implement a CMS is consistent with the required components outlined by the FTC in its guidance with the Safeguards Rule and the Red Flags Rule. These components are:

  1. Appoint a compliance officer
  2. Conduct a risk assessment to gauge current practices vis-à-vis requirements
  3. Develop a policy and procedure to address the compliance requirements
  4. Provide and document employee training on the policy and procedure manual
  5. Perform periodic audits to confirm compliance with the policy and procedure manual

Let’s use the Monroney Rule, a rather simple federal requirement, as an example of how the CMS compliance model would work at a dealership. The first task is to understand the compliance requirement. The Monroney Rule requires that all new vehicles offered for sale have a Monroney label affixed to a window.

Now that the requirement is understood, a dealer must conduct an assessment to see how the dealership is complying with this requirement. The logical approach would be to do a lot walk and review the placement of the Monroney label on each vehicle.

Next, the dealer would create a written procedure that explains how the dealership will comply with the requirement to have a Monroney label on every new vehicle offered for sale.

Once the procedure is written, it becomes a policy. The fourth step in implementing a CMS is to train the employees on the policy and instruction on the procedures required to implement the policy.

The final step to implementing a CMS is to schedule periodic inspections of the vehicles available for sale to ensure that each one has a Monroney label affixed to a window.

Most successful dealers intuitively use the CMS model to manager the processes in the dealership, but they may not be documenting the approach. The day may be coming soon when documenting will be as important as doing.

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Certified for the Future


If I could predict the future, I’d be at the nearest 7-11 buying one (and only one) lottery ticket. But here I am writing this article, which tells you all you need to know about my powers of prognostication. Still, I can’t help but occasionally peer into my crystal ball and try to interpret what I see. And what I see is a little scary — at least for those who aren’t prepared.

Here’s what I believe: First, the Federal Trade Commission (directly) and the Consumer Financial Protection Bureau (indirectly) issue regulations that affect the retail automotive world. But when it comes to actually impacting a dealership financially, neither the FTC nor the CFPB are as tough as they think.

I also believe the local plaintiff’s bar does more to affect dealership behavior than distant federal authorities. Consumer lawyers have a direct economic stake in finding, exposing and exploiting dealership violations. And trust me, it is very lucrative.

I also believe that technology, particularly social media, will eventually supplant consumer lawyers as the most effective factor in regulating dealership behavior.

Lastly, I believe no one trusts what dealerships say about themselves. However, consumers tend to believe what total strangers say about dealerships, especially if those strangers just bought a car or had one serviced at a dealership. And that’s the power of social media.

Facebook may not seem like a big threat, as scathing reviews posted there are only read by people connected to the reviewer who care or are in the market for a car. But people who go to DealerRater.com or Cars.com are almost all in the market for a car. Get blasted on those or similar sites and your topline revenue will take a hit.

In short, a herd of ticked-off customers with Internet access will have more power to influence dealership behavior than the FTC or CFPB. That’s not just the future; it increasingly describes our present.

If the fair, ethical and legally-compliant treatment of customers, as broadcast across social media, is the future of dealership regulation, how should dealers respond? The answer is obvious: Create a process that ensures customers are treated fairly, ethically, and in a legally compliant manner.

At the end of the day, most federal consumer-protection laws are designed to do just that. So doing right by regulators will also satisfy the real regulators: your customers.

The process must include a consistent, verifiable training program that includes the legal requirements for each job description at a dealership, not just F&I personnel. Per the National Automobile Dealers Association, the average dealership has 67 employees, of whom three or four are F&I managers. That means a program that only trains 4% of the workforce is going to fall short 96% of the time.

To address this need, Compliance Summit, in cooperation with Automotive Compliance Education, offered the ACE-certified Compliance Specialist program to attendees at no additional charge. Certification candidates will have access to online, interactive, video-based training on a broad range of dealership compliance topics. On Tuesday, Aug. 30, leading industry compliance experts (and yours truly) provided live test preparation, followed by the certification exam after lunch. Those who passed will receive the ACE Certified Compliance Specialist designation.

ACE is designed to assure continuous proficiency. Certified Compliance Specialists will be required to recertify annually by reviewing a current “Annual Update” module that focuses on developments relevant to their certification level over the preceding year, and passing the recertification exam.

Making the certification more meaningful is the program’s emphasis on processes that apply the theoretical aspects of regulatory language to real-life situations.

ACE is spearheaded by Gil Van Over III, founder and president of compliance auditing firm gvo3 & Associates. The idea spawned from the constant violations he came across while reviewing dealership operations, infractions that could have been prevented with proper training. “I created ACE to fill that need,” he says.

In addition to launching Compliance Specialist certification at Compliance Summit, ACE will provide certifications tailored to F&I personnel, sales associates, sales managers, business office personnel, and compliance officers. Each program will be offered online at www.AceCert.org, which will go live following the conclusion of Compliance Summit. Live review and test sessions are also expected to be part of future Compliance Summits.

The programs are designed to provide the basis for customer experiences that satisfy both the federal regulators and the real regulators: customers. That’s how smart dealers will face the future.

 

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