F&I and Showroom, February 2014

No Look Compliance Your F I offi ce should always strive to do the right thing especially when no one is looking The magazines F I insider weighs in By John Lovin L egendary UCLA basketball coach John Wooden once said The true test of a mans character is what he does when no one is watching That famous quote is especially applicable to the automotive retail industry given the regulatory scrutiny it faces today Here are a few process tips gleaned from some of the most compliant dealers groups in the country to help make your customers happy and your dealership more compliant LESSON 1 Sales to Finance Transparency A simple rule to remember is the math has to work And when an outside auditor visits your store you need to be sure the following items are contained in every deal 1 Consistent fi rst pencils from the sales desk That means quoting average interest rates and terms Using a rate matrix is another great way to avoid allegations of credit discrimination 2 Final terms from the sales desk need to be disclosed to customers before they are turned over to F I 4 Terms discussed on the sales fl oor must comply with the lenders guidelines 5 The top of the menu must match the fi nal terms agreed to on the sales fl oor 6 Follow the 300 rule Present 100 of the products to 100 of customers 100 of the time LESSON 2 More Compliance Equals More Money The large dealer groups have found that every time they add a new consumer friendly policy they increase their bottom lines Thats also true when caps on interest rates and product pricing are employed LESSON 3 Be Transparent Customers know when youre not being 36 F I and Showroom February 2013 transparent Thats why you need to operate with a nothing to hide attitude It relaxes your customer which allows them to trust what you have to say LESSON 4 Be the Compliance Leader The large dealer groups realize that the more they employ systems that drive compliance the more likely regulators will stay away LESSON 5 No Process No Profi ts People perform poorly without a good process in place Thats why large dealer groups focus on hiring the right people and what I refer to as PDF practice drill rehearse More importantly a formalized process ensures that every customer gets the same unbiased presentation LESSON 6 Record the Transaction If a regulator knows a dealership video records transactions in the fi nance offi ce they may be less likely to audit the dealership But the dealerships compliance offi cer must routinely review the transactions The best part of recording transactions is it tends to boost production because fi nance managers are more likely to make a better presentation and follow the 300 rule if they know someone is watching LESSON 7 Electronic Pencils The four square worksheet was once a great tool but it is a little too barbaric for todays more educated consumers An electronic pencil is a more professional approach as it allows for full disclosure LESSON 8 Protecting Consumers The Safeguards Rule is another key focus area as protecting your customers nonpublic personal information NPI is paramount to defending against identity theft The following are a few process tips to help you do that 1 Appoint a compliance offi cer This individuals sole purpose is to police the dealership by periodically walking the showroom to ensure that customer NPI isnt left in unsecured areas 2 Nonpublic personal information should always be stored in secure locations and never left on unattended desks 3 Nonpublic personal information should be removed from tradeins immediately and disposed of properly 4 Never allow employees to have conversations with fi nance sources over speakerphone as you could put customer information at risk should a would be ID thief be within earshot 5 Computer screens that may display customer NPI should never face windows as people outside the dealership could catch a glimpse 6 Computers should be set to automatically logoff A fi ve minute delay is recommended 7 There should be no group computer logins Each user should get his or her own login so you can identify the culprit should you face a security breach 8 Terminated employees should be removed from all systems immediately The fi nal tip is this Dont put your dealership at risk by not having a proper compliance and safeguards process Simply follow the tips listed here to get started And remember to have a qualifi ed attorney review your policies and processes to ensure they meet both state and federal requirements These steps may not make your store bulletproof but they will go a long way with regulators John Lovin serves as vice president of Chrysler Capital Consulting Email him at john lovin@ bobit com Guest Column