Over the past 10 years, compliance has become an even more important consideration for companies in the auto finance industry.
One of the most important factors driving this heightened focus on compliance is that the Consumer Financial Protection Bureau will hold companies responsible for the actions of their third-party service providers. So, even if your organization has the most robust compliance program in place internally, you could still face serious issues if your partners and suppliers aren’t functioning in a fully compliant manner.
One effective way of ensuring compliance by all of your partners is to implement Service Level Agreements (SLA’s). In the broadest of terms, an SLA is a contract between a service provider and the end user which defines the level of service expected from the service provider. In other words, what will be done, how the service will be delivered, and the timeframe in which the work will be completed. Compliance considerations should be at the forefront of any SLA.
Beyond compliance issues, the implementation of SLAs is a good business decision. Regardless of the type of service you employ—technology platforms, 1st or 3rd party portfolio servicers, repossession service provider or remarketing services— there will inevitably be diversity in service level experiences based on the provider A standard SLA will limit that diversity by defining a “mini statement of work” and will ensure that all parties have the same expectations and understanding of responsibilities.
With that in mind, let’s take a look at one segment of the auto finance industry: repossession and remarketing services. More than ever before, lenders are demanding full transparency about the repossession process. Just for this segment alone, consider the many different types of service providers in the supply chain… repossession forwarders, repossession agents, transport companies, and auctions, just to name a few. With such a diverse group of services, having solid SLAs in place will ensure that each service is delivered in a timely and compliant manner throughout the life cycle of a repossession.
Compliance has—and always will be—at the core of the corporate fabric here at Servicing Solutions, and we make regular use of SLAs…both with our clients and with our third-party vendors. As you consider your organization’s relationships with partners such as loan servicers, call centers or repossession and remarketing, pay close attention to their compliance function, and demand the use of an SLA that is focused on delivering quality work on-time, on budget and most of all, with an eye towards bulletproof compliance.