To get out in front of possible new regulations, the Motor Vehicle Ancillary Products Association is lobbying state legislatures to legally define the products so that those products are not regulated by state insurance officials. The group said it would be willing to accept rules such as F&I companies registering with state officials and submitting consumer disclosure documents for state approval.
According to the group, it has helped get ancillary F&I product legislation passed in Alaska, California, Indiana, Michigan, New Jersey, Ohio, Oklahoma, Texas, Virginia, Washington and Wyoming. In 2015 the group plans to work on laws in Pennsylvania, North Carolina, Arizona, Utah and Nevada, Meenan said.
The association typically adds the ancillary F&I product language to model legislation for extended service contracts and GAP, although details can vary by state.
Meenan said that in addition to advocating legislation, the F&I products industry could consider borrowing a page from the National Automobile Dealers Association.
NADA recommended in early 2014 that its members pick a fixed price for dealer markup on loans and stick to it. Dealerships should also cite a justifiable business reason from a preapproved list whenever they offer a discount below the fixed price -- for example, to meet a competing offer, NADA said.
Meenan said a similar approach could work in F&I products. Many F&I product administrators have already set suggested retail prices, but there's little that administrators can do if dealerships charge more.
"It's not impossible to charge everybody the same price," Meenan said. "That's not how it's done today, but it's not impossible. It's something we could be doing."