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Dealer groups join to promote F&I compliance policy

June 14, 2019
The National Automobile Dealers Association charged that finance and insurance products have been misconstrued in the media, through government enforcement and in lawsuits. So this year, the NADA, along with other trade groups, began promoting a policy that dealerships across the country can adopt to help ensure they are compliant when selling F&I products.
"They're frequently lumped into a category that suggests that all voluntary protection products are gratuitous, and unnecessary and overpriced," said Paul Metrey, NADA vice president of regulatory affairs. "Those that are familiar with the products understand that they offer considerable value and peace of mind, and we want to make sure that people understand that.
"We also want to make sure dealers are provided with a helpful, optional compliance tool to try to ensure that their operations are compliant, transparent, and at the end of the day, consumer-friendly as it relates to voluntary protection products."
The NADA sent a notice in April to its members about the policy, which it created in concert with the National Association of Minority Automobile Dealers and the American International Automobile Dealers Association.
The policy is not mandated by any state or federal regulation, Mike Alford, chairman of NADA's regulatory affairs committee, told dealers in a letter. But, he added, dealerships which adopt it would promise transparency when selling F&I products and establish procedures to ensure a policy is followed. The policy advises dealers on handling product selection and cancellations, presentations, pricing, advertisements and customer complaints, Alford wrote.
The dealer associations worked with F&I product companies, dealers, dealer lawyers and compliance experts to craft a two-page policy and a larger instruction booklet.
"The hope is that it provides dealers with tools they may not currently have to try to shore up their procedures," Metrey told Automotive News.
Dealerships which institute the policy display a poster or sign in finance offices explaining the policy and make disclosures during the F&I menu presentation with consumers, Metrey said.
The NADA isn't tracking how many dealers are adopting the guidelines.
‘Better dealer'
Charlie Gilchrist, a Texas dealer and 2019 NADA chairman, said he followed the NADA's template, modifying it in a few places, and implemented the guidelines this year at his stores. 
He said adding the policy was a "fairly easy process," and employees have had no problems. Small signs are posted in the dealership F&I offices that explain to consumers that the store has adopted the policy.
"It makes us a better dealer," Gilchrist said. "We actually have a pricing process that we follow now. I think it makes our F&I or business managers a little bit more comfortable and confident when they price the products. And they document the reasons they deviate down from the process. It gives them a little comfort, and as a dealer, it gives me a lot of comfort."
The F&I profits at his dealerships have not declined, Gilchrist said, noting that is a question he has been asked by several counterparts.