Compliance Office - An outsourced remedy?

You know there is a business in the packaging of regulatory compliance help / safeguards / training and the idea that a client's efforts (participation in the program) does indeed matter should something blow up. Like environmental issues and employment practices, this is something that - should it go bad - can be fatal.

Create a proposal to form such a company. Its solutions and sales platform seem right on the surface. Hmmm...

Forecasting Tomorrow's Compliance and Regulatory Environment
By Jennifer Reed, Editor
December 06, 2007

MINNEAPOLIS and BATON ROUGE, La. — Top executives from Wolters Kluwer Financial Services and AppOne recently looked ahead to some of the challenges that will face the indirect lending arena and dealers in 2008.

When asked what the biggest regulatory and compliance issue that the auto finance industry faces today, Lee Domingue, chief executive officer of AppOne, told SubPrime Auto Finance News, "The biggest obstacle facing the auto industry is the sheer complexity of the various legal and regulatory requirements.

"Ensuring compliance can be a time-consuming and difficult task, especially for small- and medium-sized lenders, such as community banks," he said.

As for Kevin Kopp, director of indirect lending with Wolters Kluwer Financial Services, he indicated, "With a complex legal and regulatory environment, dealers and lenders need to make sure they are interpreting and implementing new requirements correctly, which takes education and training, as well as additional time and resources.

"However, outside compliance sources can help," he pointed out. "Dealers and lenders need to look for those that can provide key benefits, such as early fraud detection and complete compliance loan packages, while helping to maintain an expeditious funding process."

Looking ahead at some of the challenges that may face the industry next year, Kopp went on to say, "Our federal and state governments continue to consider and craft consumer-oriented legislation related to auto finance and particularly the indirect lending process."

Basically, he stressed that lenders and dealers need to take specific actions. They must not ignore the potential risk and liability that comes from being passive with regards to compliance.

"During the past year, the industry has seen a definite trend toward federal and state consumer protection law enactment relating to the auto finance process. For example, there are currently several states that are, at a minimum, considering Consumer Bill of Rights legislation, which could mean greater disclosure requirements for dealerships," Kopp indicated.

Another hot topic he mentioned was documentation fees, saying, "In some dealerships this will have an effect on their bottom line. Based on recent activity, it appears this trend of introducing consumer-focused legislation will not change soon."

Domingue characterized the current regulatory environment as "very volatile," saying he doesn't see this trend ending any time soon.

"It's only getting more intense. While there are a growing number of requirements affecting the automotive finance industry, they will likely not serve their purpose, which is protecting the consumer, if there is no real enforcement," he explained. "Little or no enforcement sends a wrong message and only offers a false sense of security."

Particularly at risk from compliance and legal issues are independent dealers, Kopp noted.

"Compliance and legal issues continue to have a weighty effect on the business of independent auto dealerships. A good example of this is the recent steps some states have taken to cut down on fraudulent titles, which impacts disclosures," he said.

"This increases the risk of error, which could slow the sales and finance processes," Kopp added. "It also adds time to the administrative process at the dealership, which leaves less time to market and sell vehicles, which is the dealership's primarily business purpose."

Domingue brought to light the issue of more lenders passing increased costs onto as the compliance and regulatory burden grows.

"The direct effect on dealers is added documentation, but more indirectly is the never-ending compliance burden placed on the lending community," he explained. "The increased cost and exposure has caused some lenders to charge more and require more information from the dealer, which puts operational pressure on the dealer to be productive in an area where they typically have little or no expertise."

Returning to the topic of Consumer Bill of Rights legislation, the executives voiced their concern for the future.

"I think the general consensus is that the California Car Buyers Bill of Rights will set the standard throughout the country for the next three to five years. But this is another example of consumer-driven regulation that will only work if there is true enforcement at the state level," Domingue said.

Kopp was a bit more specific, saying that two states have passed or are considering legislation similar to what California has implemented — Minnesota and Massachusetts.

"Minnesota passed a less stringent version of the California Car Buyers Bill of Rights recently," he reported. "Meanwhile, Massachusetts has proposed Bill of Rights provisions in the past that would cap dealership markups and compensate dealers by replacing the markup with a fee of 0.5 percent of the loan amount, or $150 (whichever is less)."

He went on to say that Massachusetts is looking to require more detail in contract disclosures, particularly itemization of trade-ins.

"This type of legislation requires lenders and dealerships to be more diligent and educate themselves, which can take resource time away from their core business purpose," Kopp indicated.

In conclusion, Domingue said, "When looking ahead at the regulatory environment, it really comes down to preparation and protection. Dealers and lenders can benefit greatly from relationships with strong compliance partners who can help them avoid potential legal and regulatory land mines.

"There also needs to be better collaboration between dealers and lenders, and continuous improvement in finding ways to monitor and streamline industry requirements," he concluded.

V-Dealer

Specialize: Eco-cars (Green Dealer?), Lexus Only, Toyota Only, Honda Only, Camry Only, Convertibles, Work Trucks... Represent these specialties to define your expertise.

Find a non-retail location (industrial money) where vehicles can be stored inside in a controlled environment. Pay for the facility with related services performed by partners... or not.

Inventory management is strict with limits on dollars and age. Replace anything that sells in < class="blsp-spelling-error" id="SPELLING_ERROR_0">AutoTrader, Cars.com and Ebay Motors. These are the primary sources and major advertising expense.

Wild value proposition supported by web experience.

Maintain a stream of wholesale appearance recon flips.

Created from thin air

Create a company; incorporate it, and loan it money - enough to garner your own attention (silly but useful - stay tuned).

This obviously is a pointless act unless the company is charged with a purpose.

Q. Even then, why go through all the crap about setting it up and such?

A. The entity now exists...

Eye tracking rules

(some of which are made to be broken).

Tim points us to a terrific summary of lessons learned from eye tracking studies.

The highlights, in alphabetical order:

Ads in the top and left portions of a page will receive the most eye fixation.
Ads placed next to the best content are seen more often.
Bigger images get more attention.
Clean, clear faces in images attract more eye fixation.
Fancy formatting and fonts are ignored.
Formatting can draw attention.
Headings draw the eye.
Initial eye movement focuses on the upper left corner of the page.
Large blocks of text are avoided.
Lists hold reader attention longer.
Navigation tools work better when placed at the top of the page.
One-column formats perform better in eye-fixation than multi-column formats.
People generally scan lower portions of the page.
Readers ignore banners.
Shorter paragraphs perform better than long ones.
Show numbers as numerals.
Text ads were viewed mostly intently of all types tested.
Text attracts attention before graphics.
Type size influences viewing behavior.
Users initially look at the top left and upper portion of the page before moving down and to the right.
Users only look at a sub headline if it interests them.
Users spend a lot of time looking at buttons and menus.
White space is good.

Consider the theoretical disadvantage

Okay, it's a simple idea:

If you're a real estate broker, you work in an industry where everyone used to charge the same fee: 6%. Now, though, discount brokers are turning up the heat on fees. Lots of brokers are unhappy with this.

The challenge is... what if you had to charge 7%. What if you had to charge more when everyone else was charging less?

What would you do? How could you make it worth it?

Now, just imagine what would happen if you did that at 6% or even 5%? You'd be unstoppable.

Similar idea, inspired by the crazy pricing of the Kindle: What if, when everyone else's blog was free, you had to charge money for yours? What would you do? How would you make it worth it?

By creating this theoretical disadvantage, you find yourself looking for ways to differentiate yourself and be better / offer more / deliver better value. Hmmm...?

That BeachPunk Idea

This BeachPunk entity often creeps its way into my head. So here is a ramble of content, direction and revenue notions.

Live streaming webcam of the beach and surf:
It is interesting etc to look at. It also shouts that this is current and actively managed. So many sites that seem useful / interesting are static and appear to have been the same for months. The site and its contents need to be current. People may visit occassionally just to see the ocean. Or not

Section about natural resources with links and articles that are "beach relevant".

Section about life on the coast; restaurants, homes, activities.

Section that is a social place? Can the beach be enough of a common ground to start such activity?

What else? Sex, music, surfing?

Ad space:
Would restaurants pay?
Would Real Estate Agencies pay?
Who would?
If Google Adwords or some other method of monetizing the site is all there is, it is a hobby, not a business.
What is the scope? Local? Regional? National?

Web site - good enough

Link to Seth Godin's piece

How to create a good enough website
For most people, that's all you need. A website that's good enough. Not that breaks new ground, establishes a new identity, discovers new ways for people to interact online. Just a good enough website that didn't kill you to launch.

To be clear, the following advice assumes that:

You're not trying to reinvent the idea of a web page--that the page is a means to an end
You work with other people
So, here's what you do. First, realize that traditionally, the job of designer has been linked with the job of programmer. There were very good reasons for this. Designing a page that can't work is silly, and changing the design every time you change the way the page works can be time consuming and expensive.

As a result, web design became a sacred art, one done only by the blessed few, in caverns far away from where mortals tread. In addition, it became expensive, because design changes (which marketers love to make) got in the same queue as programming changes.

We need to start by divorcing the two practices. There's no longer a really good reason for the two to be so closely linked, especially since disciplined use of CSS and testing pays such dividends.

Start with design. Don't involve the programming team until you're 90% done with the look and feel of your pages. It's cheap to change design if it can't by supported by programming, and cheaper and faster to have design done in Photoshop before you commit to cutting it up and coding it.

I'm going to go out on a limb and beg you not to create an original design. There are more than a billion pages on the web. Surely there's one that you can start with? If your organization can't find a website that you all agree can serve as a model, you need to stop right now and find a new job.

Not a site to rip-off, but an inspiration. Fonts and colors and layout. The line spacing. The interactions. Why not? Your car isn't unique, and your house might not be either. If you've got a site that sells 42 kinds of wrapping paper, why not start by finding a successful site that sells... I don't know, shoes or yo-yo's... something that both appeals to your target audience and has been tested and tweaked and works. No, don't pick a competitor. That will get you busted. Pick a reasonably small but successful site in a totally different line of work. Say to your designer: "That's our starting point. Don't change any important design element without asking me first. Now, pull in our products, our logo and our company color scheme and let's take a look at it."

At this point, some people are aghast! Shouldn't the web be a design contest on top of everything else? I don't think so.

Now, take your finished Photoshop pages and get every single person who can possibly veto your project to say okay. THEN give it to engineering to make it work.

[Boy, am I in trouble. People hate posts like this one. They read all sorts of things into it that I don't intend. I'm certainly not against bespoke design, or designers. I certainly don't believe that all engineers are bad designers or even difficult to deal with. The point of the post is most definitely not to encourage you to commit copyright violations or even ethical ones. It merely works to recognize two things:

1. If you are unable to agree on an existing site, you are sure going to spend a lot of time and money trying to agree on a custom one.

2. The process of design and user interaction is best done separately from the process of server speed, database structure and uptime.

Forgive me!]