Ancillary products are stirring a lot of industry talk, specifically, how they are sold at the dealerships and whether they provide a true benefit to the consumer, Rob Tennant, recently appointed chief legal officer at Veros Credit, told Auto Finance Excellence.
From extended service contracts to guaranteed asset protections, ancillary products can serve as a prime way to enhance revenue for both the dealer and lender. At times, that appetite for revenue has sparked regulatory issues. Rudy Aguilar, director of consumer protection in the Texas Office of Consumer Credit Commissioner (OCCC), said at the Auto Finance Performance and Compliance Summit in May.
The Texas legislature has fined dealers and lenders in the past for selling ancillary products that provide absolutely no value to consumers, which results in lenders dealing with the outcome as they are the ones collecting payments.
Therefore, it is vital to ensure that each customer is able to “make an informed choice about any add-on products and that sales are not a result of high-pressure tactics,” Tennant said.
How can lenders make sure that their employees are in check and up to speed on regulations when these challenges come into play? How can lenders verify their employees are informing customers and not just pressuring sales? Tennant lists his top tips for businesses to ensure their employees are compliant.
- “Call Monitoring is Key”
While presenting information to employees is important, a business does not really know the “efficacy of its training until we hear employees adhere to our policies in real time,” Tennant added. Utilizing a learning management system can serve as a primary way for management to have the ability to roll out changes in real time by customizing training modules, and requiring digital signatures may ensure 100% participation.
- Learn Management System Tracking
Management system tracking means is more than simply sending emails to employees, as that just “isn’t enough,” Tennant advised. It is vital for management to ensure that every employee has read and understands the materials, and signs off on receiving the messages. In the event that employees are not timely in reviewing policy changes, initiate a corrective action process, which includes coaching sessions, verbal and written warnings, and termination if required. For larger changes, set up classroom training with less than a week’s notice — this allows management to personally engage employees and answer questions as they come up.
- Pay Attention to Consumer Complaints
Analyze complaint data to look for trends in customer issues. Take the time to deep dive into the complaint data and evaluate trends, that way you can find gaps in training materials or discover if ancillary products are an issue that comes up more often than others.
- Make It Easy
The final piece of advice is simple: Create readable, easier to follow work standards that track the formal company policies. “If an employee can easily understand and implement the materials, the employee will likely see that it’s possible to be compliant and successful,” Tennant said.