How Staying Compliant Improves Customer Experience

There are many good reasons for a financial institution to comply with current lending regulations. Nobody wants to pay hundreds of thousands of dollars in fines or earn a reputation as someone who takes advantage of consumers. Not least of all, good lenders feel an ethical obligation to follow the law and treat customers fairly, simply because it’s the right thing to do.

Ever-changing federal, state, and local regulations mean you should never let down your guard or get lazy with your compliance procedures. In fact, the trend among regulators has been increased scrutiny when it comes to lending practices, and more aggressive enforcement when violations are found, so staying on top of the industry’s countless rules and regulations is more important than ever.

Compliance as Customer Service. Perhaps the most important reason to emphasize compliance is that it fundamentally enhances the customer experience. You can boost customer satisfaction by having a solid, robust compliance management system (CMS) in place to help streamline the financing application process. More automation means fewer errors and less hassle for the borrower — improving their experience and increasing the likelihood of the loan being closed. Another strategy is to partner with vendors that specialize in areas where compliance can be especially complicated or time-consuming, like extended warranties, vehicle service contracts, and collateral protection insurance. Leaving the details to experts and letting them assume some of the risks can relieve part of your compliance burden and allow your staff to focus on better serving your customers.

Trust Turns to Satisfaction. Stringently following all rules and regulations consistently over time, and even going above and beyond what’s required, builds a reputation as a lender that dealers and consumers trust. It doesn’t take many missteps, even unintentional ones, to break that trust, and in the social media world we live in now, every mistake has the potential to become extremely visible. So prioritizing compliance efforts just makes good business sense. It also provides a lower-stress, more positive transaction for buyers — something they will tell their friends and family about and will remember when they’re in the market for another vehicle. Ultimately, consumers buy from people they trust and businesses with whom they’ve had a great experience.

Lynn Hess is a content specialist at State National Companies in Bedford, Texas, and writes on a variety of financial topics relating to banking, credit unions, and insurance. State National, a division of Markel Corp., is a provider of collateral protection insurance. In its lender services segment, the company specializes in providing portfolio protection solutions including automobile and mortgage insurance for loans made by credit unions, banks, and specialty finance companies. State National is the Customer Experience Partner of Auto Finance Excellence (AutoFinanceExcellence.org), a sister service of Auto Finance News.

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