RALEIGH, N.C. — FNI Inc. — a collateral protection and
consumer benefit program product and compliance agency for auto finance
providers — designed what the company believes is the industry's first GAP
offering bundled with a vendor and product
management solution for compliance with the Consumer Financial Protection Bureau.

To create the solution, FNI explained that it first selected
an experienced GAP administrator offering clear, consumer friendly contractual
terms and full total loss GAP protection to ensure consumers are provided with
a product that truly pays the complete "gap" between insurance company
settlement and remaining loan obligation.

Bundled with GAP contractual protection and with a focus on
compliance with the CFPB service provider and add-on product guidance
bulletins, FNI aimed at providing financial institution clients with a GAP
vendor and product management compliance solution that includes templates for
product purpose and policy, provider and marketing material due diligence,
employee and network sales training and certifications, internal program
compliance administration and full program implementation and ongoing product
and compliance support.

FNI designed the solution because the company contends there
are four common consumer protection issues surrounding CFPB compliance for
products and providers that should be the starting point for internal due
diligence process and compliance efforts. Those four areas include:

—Penetration Rate: FNI said financial institutions that sell
add on products need to be able to justify their sales penetration rates,
otherwise it may appear that the product is being "packed" and the consumer
does not really have a choice about purchase.

"If your product penetration rates far exceed industry
averages, you are at risk of scrutiny," FNI said. "There are marketing
approaches, underwriting guidelines and processes that can help justify your
performance."

—Price/Value: FNI insisted consumer protection issue boils
down to whether or not the bureau perceives that the consumer is getting a fair
deal.

"That means that product value, pricing and profit margin
are all in the spotlight," FNI said. "In the due diligence and compliance
documentation you maintain for your providers, be sure you have a written
statement of the purpose, goal and value of the program, and can justify your
product profit markup.

"Profit is still allowed but be certain that you are not an
outlier on the high side of the industry average retail cost of your add on
products," the company continued.

—Marketing Process: Second only to value, FNI explained that
how an add-on product is presented and sold to a consumer is the most serious
question impacting consumer protection.

"Good news: You can control this process best. Bad news, the
CFPB knows that and has very high expectations for financial institutions that
sell products," FNI said.

FNI stressed that finance companies must have a compliance
process for selling products to consumers.

"Starting with written marketing materials and including the
actual product verbal presentation your employees make to a consumer at the
time of the sale, your marketing should be designed to ensure the consumer
knows precisely what the product does and does not do and can make a reasonably
informed decision about purchasing it," FNI said.

"Be aware that many product providers who provide F&I sales
training designed exclusively for dealerships do not necessarily provide the
kind of sales and marketing training that your compliance obligation requires,"
the company continued.

—Program Administration and Management: FNI went on to
mention the consumer's interaction with a finance company and its service
provider in conjunction with a sold product and its benefits or services is
another issue the CFPB has identified as the primary responsibility of the
selling financial institution.

"You are responsible for ongoing monitoring of your service
provider's performance with regard to the services and benefits of the product
and intervening if necessary to ensure the consumer is actually getting what
they thought they were purchasing," FNI said.

"In addition, you are expected to have internal program
administration processes to assist the customer with common product
administrative issues like cancellations and refunds."

After highlighting those four areas, FNI president David
Bafumo reiterated how the company's newest tool can help financial companies
avoid issues with the CFPB.

"GAP is a win-win-win product for consumers, financial
institutions and originating automobile dealers. Nonetheless, it is a product
in the regulatory spotlight and finance companies offering a captive or
preferred GAP product must ensure their marketing process is compliant and the
product and provider perform as advertised," Bafumo said.

"With this first compliance bundled package, FNI makes
consumer protection compliance, and the essential documentation to prove it,
both simple and seamless," he went on to say.

To learn more about FNI's assured consumer protection
compliance GAP program or additional compliance and product services offered by
FNI, contact Bafumo directly at (888) 973-9776 or visit the company's website
at www.myfni.com.


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