July 24, 2021

With new president comes ‘significant’ F&I scrutiny

Compliance in the finance-and-insurance office is a top concern for dealerships for the next four years under President Joe Biden. With more federal eyes on their operations, dealers must recommit to following the rules in 2021.

Experts at the National Automobile Dealers Association’s virtual conference last week discussed the likely uptick in federal scrutiny under an emboldened Consumer Financial Protection Bureau and Federal Trade Commission. Both organizations will be led by vocal opponents of dealership reserve and sales of F&I products.

NADA’s Paul Metrey last week outlined a slew of regulatory challenges dealerships likely will face. Among them, the FTC’s scrutiny of dealer participation and voluntary protection products, as well as a series of sweeping amendments proposed by the commission to its Safeguards Rule.

“Elections have consequences,” Metrey said during a workshop discussion last week. “They did in 2016 when President Trump was elected. They did when President Obama was elected — President George W. Bush, President Clinton and on back. They always do. This year, they’re very significant.”

Reflecting on actions the CFPB undertook during the Obama administration and actions the FTC has taken in recent years, the automotive finance industry has protocols in place to manage an uptick in scrutiny. Managing appropriate compliance programs in the F&I office, and documenting those processes, should be a priority for dealerships this year. Providing a secure environment to document compliance procedures in digital transactions also should be a top concern.

Industry guides such as the NADA Fair Credit Compliance Program should also be considered, as per the CFPB task force report released last month.

The F&I office is one of the most heavily regulated areas of the dealership and most profitable. Keeping those profits safe requires staying out of trouble.