As panelists at the F&I Industry Summit said last week, modern compliance management systems based in software, policies and employee training contain and prevent the spread of abusive practices in the F&I office. Implementing such systems may be a no-brainer for large dealership groups, but some smaller groups lack the infrastructure and capital to install those same systems.
Many large dealership groups, such as Hendrick Automotive Group in Charlotte, N.C., and Suburban Collection in Troy, Mich., rely on software to monitor F&I pricing and send alerts to the corporate support team if a product is priced too high or too low.
For one- or two-store groups, the trappings of a full compliance system are more difficult to manage. But compliance experts say that even if the methodology is low-tech, there are still ways to stay within the law.
So what can they do? Outside of automated systems, a dealership can still prioritize compliance by applying the same principles on a smaller scale. Every dealership, regardless of the size of its staff, should have a compliance officer.
Rather than a board of directors managing compliance issues, the onus would fall to a dealership's senior management -- so long as the individual serving as compliance officer is separate from the store's direct business lines, such as sales or finance.
A dealership can prioritize compliance by having someone audit deal jackets on a periodic basis, says Terrence O'Loughlin, director of compliance for Reynolds and Reynolds, who is based in Fort Lauderdale, Fla. Pricing guidelines for F&I products should be set in advance as part of an ongoing and frequently updated compliance program, he added.
"It would be wise to have some idea of what the dealer thinks is a fair way of marking up products," O'Loughlin said. "Some big dealer groups have a firm number in mind, but every dealer should contemplate that."
Even without electronic reporting methods, complaints of abusive practices against customers or even dealership employees need to be documented and reviewed impartially. An anonymous suggestion box, tucked away from any security cameras, is one possible solution for a company that cannot afford compliance software.
However, whether maintained by software or human intervention, any compliance program that is not enforced from the upper echelons of that dealership group will likely be ineffective.
Software that detects an F&I product sold outside a certain price range is meaningless unless the dealership group sets that range within ethical boundaries. If the suggestion box method didn't work for middle school bullies, it's unlikely to work for a dealership that doesn't eat, sleep and breathe compliance practices.
Small dealership groups should -- and can -- prioritize compliance just as much as big groups. Even if compliance software is out of their price range, every dealership, regardless of capital and scale, should have compliance policies and procedures in place.