When George Angus started in the F&I industry in the 1970s, finance and insurance managers routinely accepted cash and perks directly from lenders or F&I vendors.
Today, says Angus, head trainer for Team One Group, of Scottsdale, Ariz., "In most dealerships it's a firing offense, that's how serious it is."
Dealerships' prohibitions against such incentives, and the enforcement of those prohibitions, are likely to be ratcheted higher due to concerns that federal regulators are looking more closely at F&I products and how they are priced.
"We prohibit our finance managers from taking incentives -- gift cards, things like that," said Brian Leary, vice president of finance and insurance at the Larry H. Miller Dealerships, of Sandy, Utah, the nation's 10th largest dealership group as ranked by new units retailed.
"We want the focus to be on what makes a deal right for the customer," Leary said at the American Financial Services Association Vehicle Finance Conference in New Orleans prior to the NADA convention in January.
Instead of direct payments, most dealerships now insist that vendors direct any incentives via dealership management, Angus said.
"I don't know of any dealer, anywhere, who wouldn't be really mad if they found out somebody was paying their F&I managers directly," Angus told Automotive News.
Experts said many dealerships are re-emphasizing that policy today because watchdogs such as the Consumer Financial Protection Bureau and the Federal Trade Commission are looking more closely at F&I practices.
The CFPB has made it clear that it wants to end discrimination in auto loans originated at dealerships. That includes unintended discrimination in the form of procedures that nonetheless result in a so-called disparate impact, for example, higher payments for protected classes such as minorities or women.
The CFPB's major push so far has been to seek to eliminate dealer discretion in setting dealer reserve. Dealer reserve, or dealer markup, is the small amount of interest that lenders allow dealerships to add to the lender's interest rate on a car loan to compensate the dealership for helping to arrange the loan.
The CFPB says dealer discretion can result in a disparate impact, or higher interest rates, for legally protected classes of borrowers such as minorities.