Robertson: High success rate
The Association of Finance and Insurance Professionals, as part of its compliance training, requires students to answer 25 questions on ethics, in the hope that the exam will lead to ethical behavior in the workplace.
According to association President Dave Robertson, it’s worked. Of the more than 55,000 associates the nonprofit has certified in the past 26 years, it knows of fewer than 10 who have gotten their employer in trouble because of unethical practices.
With dealership profits increasingly tied to F&I sales, the association ensures dealership professionals ranging from F&I personnel to sales staff understand the importance of F&I ethics and situations they might face when personal ethics could be questioned, Robertson told Automotive News.
The association’s certification process combines personal accountability with knowledge of state and federal regulations that set boundaries for ethical behavior. Those who take the course receive a textbook written by the Hudson Cook law firm, online materials, conference call sessions and an exam review. The exam requires a score of at least 80 percent. Students must also complete an applied ethics module and sign a personal code of ethics. A two-day boot camp in the dealership is also offered.
F&I managers confront a plethora of ethical questions throughout their careers.
Catch 22
How to assess a dealer’s ethics
- Listen to how management and employees talk about their customers
- Ask how long employees stayed in the position you are applying for and whether they quit or were fired
- Evaluate whether the compensation plan, performance expectations align
- Ask about employees’ standards for handling customer complaints and achieving performance thresholds
- Ask about skill development and compliance training
- Research legal actions against the dealer
Source: Association of Finance and Insurance Professionals
The association’s exam highlights dilemmas they may face. For example, Robertson said, some dealerships may offer a Catch 22 compensation plan.
In this scenario, a dealer might tell an F&I manager that to keep their job, they have to perform to a certain level. But if they are caught cheating, they will be fired. However, at some dealerships it may be almost impossible to hit performance standards “without cutting some corners,” Robertson said.
Sometimes employees think they can change dealers and show them that they can do the job in an ethical way. But Robertson said F&I employees should only work for ethical dealers. If the dealer turns out to be unethical, Robertson suggests F&I employees find work elsewhere.
“Regardless of the official dealership policy or the practices condoned by management, it is incumbent upon the F&I professional to act ethically in his or her dealings with customers, even if it requires finding employment at another dealership,” according to the association’s code of ethics.
Dealerships shouldn’t put employees in situations such as this, Robertson said, but employees can take steps to prevent such problems. When interviewing for a job, a potential employee should learn about the dealership’s reputation and expectations for the position. He said an employee also can learn about the store by listening to how management and others talk about their customers.
“You can tell when you’re getting into a situation where the store does not have a culture of compliance,” Robertson said.
Payment packing
Packing payments, or jamming, is inflating a monthly car payment to offset the cost of an aftermarket product.
The practice violates the association’s code of ethics.
“The F&I professional does not make false statements or fail to disclose a material fact while performing the responsibility of the office,” the code states.
Payment packing is illegal in California under the Car Buyer’s Bill of Rights. The National Association of Attorneys General also denounced payment packing in a 1999 resolution.
In such cases, an employee might include an aftermarket product in a transaction but not disclose it to the customer and in some cases fail to provide the service, Robertson said.A common instance is vehicle window etching, a theft protection service that etches the VIN into the vehicle’s glass.
“That’s always been the one, if you wanted to mouse the customer, because you don’t have to show them anything, tell them anything,” he said.
Egregious markup
In another scenario, a dealership may overprice products, Robertson said.
Dealers and some lenders have established markup thresholds on aftermarket products so that an F&I manager can’t charge somebody $6,000 for a $2,000 product, Robertson said.
“It keeps an unscrupulous F&I manager or a desperate F&I manager from taking advantage of the particular customer that might be naive but has good credit because you can’t gouge them because you have limitations,” he said.
The association provides a decision matrix to help with ethical conduct wherein the more people who benefit the better the decision, Robertson said.
“Because if you make a decision on a job situation or a personal situation and the only benefactor is yourself, that might not be a very good decision. But if you can say, ‘You know what, I’m making a decision that’s going to help me and the customer,’ that’s a good decision.”