Dealer Compliance: What You Need to Know (It’s NOT All About the Paperwork)
Looking back through issues of F&I and Showroom magazine, we found an article called A Dealer’s Guide to Compliant Paperwork. It offers practical advice to F&I managers about taming the paperwork tiger, and provides the key forms needed for an vehicle sale to remain in compliance. The form list includes the basics, such as sales worksheets, photocopies of driver’s licenses, credit reports and more.
What they don’t cover, though, is how to tackle workforce compliance.
Transactional compliance is crucial for your dealership, that’s a given. But you need to make sure your workforce understands what’s expected of them as well. Most dealerships have a program in place to cover the “front of the store” and have a pretty solid understanding of the do’s and don’ts to keep you out of hot water with your sales transactions. But the “back of the store,” where the operational component of your workforce comes in (your porters, your service techs), that’s another problem altogether.
But the “back of the store,” where the operational component of your workforce comes in (your porters, your service techs), that’s another problem altogether.
What really scares auto dealerships
Paperwork may be the least of what keeps dealership managers up at night. Scary comes in the shape of what seems like big, hairy federal and industry regulations, such as these two issues:
Workforce compliance. A trend in many states are new laws governing who is exempt and non-exempt, who gets paid overtime and who doesn’t, whether sick time is paid or not, and whether the title of manager is a misclassification of employment, and that may depend on the level of wages.
These regulations are muddying personnel and management relationships and putting dealerships at risk for legal action. The situation is so ripe, lawyers are now advertising on billboards to employees who what to file wage and hour lawsuits.
Fair Lending laws. Consumer Financial Protection Agency, Department of Justice, Federal Trade Commission, state Attorney Generals. These regulators all have one thing in common: they’re increasing scrutiny on lending practices and stepping up enforcement when violations are uncovered.
Unfortunately, what constitutes consumer fraud can sometimes be a grey area — it can mean anything that negatively affects the consumer. And that’s the really scary part. While out-and-out fraudulent lending practices may be easily determined, things like advertising miscues or disparate impact can fall under the same fraud umbrella. And scrutiny by a regulator can tarnish your reputation and bottom line.
What to do? Tackle the compliance tiger by the tail.
It is more important than ever to make compliance a core of your dealership business operations. Your show floor is important, but it’s what happens in the back office that counts when it comes to preventing fair lending and workforce violations. Here are two areas to consider:
Develop a compliance management system. Regulators, specifically the CFPB, expect every entity to have an effective CMS adapted to its business strategy and operations. Under its guidelines, a CMS contains four areas of focus:
- Board of Director Oversight
- Compliance Program
- Consumer Complaint Response
A good CMS can proactively address the risks relevant to your organization while meeting multiple regulatory requirements.
A good CMS can proactively address the risks relevant to your organization while meeting multiple regulatory requirements. It can shine a light on problems that may be a symptom of deeper issues within your organization. Properly administered, it can fix those issues before they blow up into something costlier. Meanwhile, management will be better prepared when regulators come knocking on the door, allowing them to minimize the typical “fire drills” that distract your organization from its core business. Finally, and most critically, a CMS prevents harm to consumers by minimizing violations of the law and helping the workforce meet its compliance obligations.
Take a systematic approach to compliance within your workforce. It’s incredibly important to educate both managers and employees about what your workforce polices are. This will help clear up confusion that can lead to exposure and litigation.
Taking a systematic approach to workforce compliance means putting into action reliable, repeatable management and monitoring of your compliance initiatives. This ensures the right people get the right content at the right time.
A systematic approach helps clear up confusion that can lead to exposure and litigation.
A different way to manage compliance activities across your workforce.
When you unify policy management, learning, and communications into one system, you protect your business by making compliance easy for both your employees and managers.
Yes, dealerships may be vulnerable to a lot of regulations and workforce situations. That’s why it’s important to understand the difference between transactional and workforce compliance. An automated compliance system can mitigate risks and help you tame the tiger — and sleep better at night.