Phone: 630-495-2282 Fax: 630-495-2260 Map/Directions

Seminar advises F&I ‘best practices’

November 18, 2010

While compliance matters seem never-ending, representatives of the JM&A Group offer one measure of relief. They said the responsibility for achieving all that compliance rests with everyone at the dealership.


The company, which focuses on F&I performance, presented an April 18 seminar, "The Car Business, Compliance & You," hosted by the Illinois Automobile Dealers Association at the CATA.


"There’s plenty of money to be made the right way. The keys are disclosure and customer compliance. That will shut down a lot of the lawsuits," said JM&A’sChris Costello, who is a CPA and an attorney.


Costello and colleague Peter Chasetz spoke about navigating the increasingly complicated compliance maze. Required paperwork has fattened some deal jackets to one-half inch thick.


Chasetz said dealers are increasingly under a microscope, with negative media attention and assaults by some attorneys general to limit dealer margins on car loans. "When did profit become a four-letter word?" he asked. Dealers should be permitted to earn a profit because what constitutes a "good deal" for a customer actually is a state of mind, said Chasetz.


He said F&I managers must follow a process, for consistency, and address certain issues:


• Disclose everything.

• Be truthful. Answer questions openly and honestly.

• Build value in the product. Customer satisfaction is reached when value exceeds cost.

• Attend certification programs.


Costello reminded the seminar’s 100 attendees of their responsibilities under various government regulations, like issuing privacy notices and safeguarding customers’ nonpublic financial information.


Under the Fair Credit Reporting Act, a lender that denies credit must issue a written adverse action notice to the applicant. For a customer with a shaky credit history, whose application likely would be denied, dealers who decide not to forward the application to a bank or other lender effectively become the lender. Such action would require the dealer to issue an adverse action notice.


Costello said some lawyers have sent administrative assistants or others with poor credit to dealerships, to inquire only about high-end cars. A dealer who doesn’t forward the loan paperwork and who does not issue an adverse action notice is ripe for a lawsuit. His advice: Submit all loans to lenders and let them worry about issuing the notices.