It looks like compliance will be the No. 1 topic at the National Automobile Dealers Association convention in New Orleans this weekend, judging from the many F&I workshops, trade show displays, and all manner of sales pitches scheduled to take place.
The Consumer Financial Protection Bureau, which is campaigning against dealer reserve, is behind much of this interest, of course. Dealer reserve, or dealer markup, is the dealership share of the interest rate profit on a loan.
Some experts expect the CFPB to investigate markups on F&I products next.
In addition, speakers during last week’s Automotive News Access F&I Webinar, “F&I Trends to Watch in 2014,” said it’s important to remember the CFPB is also working with the U.S. Department of Justice and Federal Trade Commission.
State attorneys general and other regulators, such as state insurance departments, also have their eyes on dealerships. The CFPB doesn’t have direct jurisdiction over auto dealers, but the others do.
Not only that, federal and state regulators have agendas besides dealer reserve, said Marc Bonanni, general counsel for The College of Automotive Management in Santa Ana, Calif.
During the Webinar he cited dealership advertising as a potential target. Spot delivery is another area regulators could attack in 2014, experts said. That’s because spot deliveries can sometimes lead to what consumer-advocate groups call yo-yo financing, otherwise known as re-contracting. In re-contracting, the customer has to come back to the dealership to sign a new finance contract at a higher rate.
With so many threats, it’s no wonder “compliance” is such a buzzword.