The 100% Rule

Experts agree that total compliance is possible, and profitable, for well-run F&I departments.

December 2014, Auto Dealer Today - Feature

by David Gesualdo

David Gesualdo, Auto Dealer Monthly Publisher
David Gesualdo, Auto Dealer Monthly Publisher

When Randy Crisorio, president and CEO of United Development Systems Inc., took the stage at the inaugural Compliance Summit last month, he kicked off his keynote address (ominously titled “Dealer Beware”) with a series of slides. They depicted actual newspaper headlines about dealerships that had been swept up in or otherwise affected by regulatory actions by the Federal Trade Commission (FTC) and the Consumer Financial Protection Bureau (CFPB).

Those of you who follow industry news would recognize most if not all of the headlines. “FTC Charges 10 Dealers With Deceptive Advertising,” “CFPB Targets Dealer Markups,” and so on. No dealer is unaware that you have a target on your back, and Randy’s objective was not to remind them — after all, those who attended Compliance Summit were there for a reason.

Once he had the crowd’s attention, Randy shifted gears. The point of his address was to remind dealers that compliance yields production. Compliant sales and F&I processes are built upon a principle that demands every car buyer and every applicant for dealer-arranged financing be treated the same.

That means 100% of the people, 100% of the time. Sound familiar?

I am not aware of any nationally recognized F&I training program that does not include, in some form, a mandate to offer 100% of your products to 100% of your customers. I believe most trainers would agree that the fact that so few F&I managers adhere to this rule is part of the reason they are still very much in demand. And that’s despite the fact that dealer-arranged financing has been around for several decades and every F&I professional has heard the rule stated at least a dozen times in every training session and industry conference they have ever attended.

This principle extends beyond product presentations. Much of the final session — an open forum we called “Is This Compliant?” — was spent discussing the wisdom or danger of recording F&I transactions. Some dealers and trainers believe video will be their saving grace; others say evidence is evidence. But all agreed, along with the attorneys present, that if you’re going to record one, you have to record them all, and your processes for disclosing the camera’s presence and reviewing, saving and deleting those videos must be consistent.

That leads us to this month’s training article. Here, Ron Reahard revisits another axiom familiar to the pursuit of F&I production: “Inspect what you expect.” In the dealership space, this typically refers to dealer principals and senior managers who are struggling to get their F&I teams to perform. In this case, Ron asks those of you whose F&I departments are performing to make doubly sure nobody is taking shortcuts to reach their profit-per-retail-unit benchmark.

Whatever the cause, effect or intent of malfeasance in the finance office, the result is always the same: trouble for the bad actor, their manager, their dealer and, ultimately, the industry. The only way to head off catastrophe is to get involved early, insist on compliant practices throughout the sales and F&I process and work with your teams to ensure everyone is following the rules 100% of the time. Compliance is here to stay. Let’s make it work to our benefit.

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