Complacency Or Cockiness? Both Lead To The Same Results

It seems like almost every week someone reaches out to me when it's too late. This frustrates me, because I care deeply about the people in this industry. I feel like between my articles, Ignite’s Tip of the Week and presentations I do at the various industry events, I am doing plenty to get the word out that the time to act is before a problem arises. Nevertheless, there I am, week after week, having to corral the horse after it left the barn.

Here are a few recent examples:

“That’s not a Problem, is it?”
A finance company called me to discuss a demand letter it received related to a ServiceMembers Relief Act claim. It seems that the servicemember customer had notified the company of his enlistment a year earlier. A month or two later, he sent an email asking for the 6% interest rate reduction. It was explained to me that this finance company doesn’t see a lot of servicemember related issues, so its personnel didn’t know what to do and did nothing. “That’s not a Problem, is it?”, I was asked.

Unfortunately, I had to advise that it is a problem and could be a big one. I patiently explained the duty to act upon the interest rate reduction request and how the company should go about handling the recalculations issues that were created by not doing so in a timely manner. I also walked them through the importance of providing SCRA training to their personnel and having policies and procedures to guide them on these issues. Luckily for this company, the issue was resolved, but it’s a good example of how trouble can come from unsuspected places.

“I Knew I Should Have Called Sooner”
Next, I received a call from a sporadic “client”. I use quotation marks around that word because I get about a call a year from this company. The pattern is that we usually run into each other at the summer Conferences, they follow up with a call about a question or two, and then the pattern repeats the following year.

In this instance, though, they were calling because in response to a question at a 20 Group meeting, they had shared a copy of a letter they use during the postrepossession process, and their moderator had expressed some concerns and suggested that they get it reviewed. Upon examining it, I asked what its purpose was, because to me it seemed to be a voluntary surrender form and I thought it was acceptable for that purpose. What I found out, though, was that this form letter was being used as part of the “strict foreclosure” process under Article 9 of the UCC, and for this purpose I found it to be deficient. “I knew I should have called sooner” was the reply, and we had a rather unpleasant discussion about the possible headaches this errant letter could cause.

If I’ve said it once I’ve said it a thousand times: Please have at least an annual review of any document or letter that will be provided to the customer. You’d be amazed at the things I find when I do these reviews, even for clients that participate in this process regularly with me. There is a phenomenon that’s called “document creep”, where new paperwork gets added and there isn’t often any consideration as to how it fits in the overall documentation. Worst Case, a document review will cost you a bit of money. Best Case? It will save thousands or even tens of thousands of dollars because something will be uncovered that has the potential to be costly.

“Trial and Error”
Recently, a small dealer came to me with a big problem. It had just received a rather horrendous examination write-up from its state regulator. To be candid, it was one of the most brutal ones I’ve ever read, and the examiner’s frustration was dripping from the pages. Excessive fees, missing paperwork, failure to respond to complaints, the list went on.

I asked about the business and learned that although they’ve operated for almost twentyfive years, they’d never sought any guidance or advice on their legal obligations and how to operate. The owner took me through a history of license issues, lawsuits and concerns of the regulator. “My modus operandi is trial and error,” he explained.

So what did I advise them? Train your staff, have a document review, adopt a compliance management system, adopt policies and procedures and then painstakingly implement them, set up a complaint management system. Stop me if you’ve heard this before, and I know you have because the vast majority of my articles touch upon these initiatives.

Call to Action
You know that pesky little pile of paperwork on your desk that you don’t want to deal with because it's all annoying compliance and legal mumbo-jumbo? Stop ignoring it and take some action. Or that list of compliance questions that you’ve kept forever but have just never gotten around to asking about? Now’s the time, folks. Don’t be cocky, thinking that “we’ve always done it this way and haven’t gotten in trouble yet”. Don’t be complacent, allowing these matters to always take a back seat to the daily operational issues.

It’s time to act and get your house in order. It’s more pleasant and a whole lot cheaper when I’m contacted ahead of time rather than when the wolves are at the door. Thus, endeth the lecture. I hope to see everyone at the MidAtlantic Annual Convention & Tailgate in October.