NADA plans to roll out a template to help dealers sell finance and insurance products compliantly.
It aims to launch the template, called the Voluntary Protection Products Policy, in the second quarter. The template addresses transparency, oversight and coordination with other departments and lenders. It also offers best practices over the life cycle of a product, including developing the advertising strategy, addressing customer complaints and handling cancellations. When developing the template, which is complimentary to its members, NADA got feedback from industry experts such as F&I product providers and state dealer associations.
"It's good for our customers, our dealers and our industry," said Charlie Gilchrist, 2019 NADA chairman and president of Gilchrist Automotive, which sells nine brands at five dealerships in the Dallas-Fort Worth area. Gilchrist's stores adopted the policy last week.
Laws around F&I product sales and pricing vary by state. The template is a high-level guide that dealers can tailor to their state laws.
NADA released its Fair Credit Compliance Policy & Program in 2014 when the Consumer Financial Protection Bureau was more aggressively regulating auto finance and dealer reserve — the retail margin dealerships earn for arranging a loan. The fair credit policy recommends dealerships adopt a set method for determining dealer reserve. In cases where the dealership reduces the preset amount of compensation, it must document the reason.
The F&I product policy isn't in response to extensive regulation, but creating it was part of an effort to ensure that dealers, with a documented process, are equipped to comply with F&I product regulation down the road.