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Dealer Financial Services F & I Guide To FAIS Compliance And The Sales Process
Dealer Financial Services
F & I Guide To FAIS Compliance
And
The Sales Process
Table of Contents
1.0 Background
2.0 FAIS Overview Background
Business’s response to the FAIS legislation
What constitutes advice?
Implications of giving advice
Key individuals
What is the link between FAIS and Financial Product Subcategories?
Fit and proper requirements
Compliance officer
Penalties and offences relating to non-compliance
2.1 Sales Process
2.2 Signed OTP’s
2.3 Letter of authority / introduction
2.4 Verification of ID’s and proof of address
2.5 Needs analysis / advice record 2.5.1. Client portfolio information
2.5.2. Recommendations to clients
2.5.3. Client decisions
2.5.4. Plan types
2.5.5. Disclosures in the needs analysis document
2.5.6. Client signatures and initials
2.5.7. Exceptional cases for the non-completion of the needs analysis
2.6 Quotes
2.7 Application Forms
2.8 Confirmation of cover
2.9 Deal file checklist
1.0 Background
The role of Finance and Insurance Manager has evolved over the past few years into
that of a Financial Advisor. As such, it is now very carefully regulated to ensure the
protection of the general public from unscrupulous financial practices.
The F & I is therefore subject to numerous legislative / compliance requirements
e.g:
Financial Advisory and Intermediary Services Act (FAIS) – This legislation
regulates the provision of financial advice incl. information that must be
given to clients, records that have to be kept etc- Subordinate legislation:
General codes of conduct and Fit and Proper requirements.
Financial Intelligence Centre Act (FICA) – This legislation seeks to identify
and prevent money-laundering activities through the verification of clients
identities and establishing the source of funds in large / unusual cash
transactions.
National Credit Act (NCA) – This legislation regulates all credit related
transactions incl. format of agreements, information that has to be disclosed
to clients and the capping of interest rates that can be applied to the
agreement.
Consumer Product Bill – As with the NCA, this act regulates all remaining
non-credit transactions in the market.
Based on the above framework, it is easy to realize the complexity of being an F & I
and the challenges which they face. To address the risks, a compliance framework
has been put in place which all F & I’s are required to adhere to and which is
monitored on an ongoing basis.
2.0 FAIS Overview
Background
The FAIS Act was signed into law in November 2002. Most of the associated detail
that gives teeth to the Act is contained in the FAIS subordinate legislation e.g.
General Code of Conduct, Fit and Proper requirements etc
The purpose of FAIS act is to regulate the rendering of financial advisory and
intermediary services to clients and making the relevant parties capable and
accountable for the advice they give thereby making the financial services industry
more professional. FAIS is regulated by the Financial Services Board (FSB).
In essence, providers of financial services must be licensed and must meet strict
obligations for themselves and there representatives if they wish to operate as such
(incl. their representatives).
Business’s response to the FAIS legislation
Each dealership was faced with having to register as a financial service provider
(FSP), based on the fact that advice was being provided by the F & I Managers and
or sales staff (“representatives” as defined in the FAIS Act). Discussions followed
with the FSB to establish a more efficient and cost effective solution that would
ensure minimal disruption to current operations.
The bigger groups had the cost advantage of F&I Managers being overseen and
developed by a Regional F & I Managers. This corresponds with the FSB’s view of
the function of a key individual (manage and overseeing of representatives). The
FSB was also concerned over the ability to ring fence the provision of advice within
a group. DFS offers this function to all dealers, whereby we will act as the Key
Individual in the dealership overseeing compliance or alternatively the dealership
can act as a representative of DFS with our staff performing all the functions of a
Financial Service Provider on their behalf.
What follows is a basic introduction to the various concepts and roles in the FAIS
legislation. You are urged to review this document and note any questions or
concerns that you may have with Geoffrey Forrester
“With effect from 30 September 2004, a person may not act of offer to act as a
financial services provider unless such person has been issue with a licence under
section 8.”Section 7.1 FAIS act 2002
“A person may not carry on business by rendering financial services to clients for or
on behalf of
(a) Any person who:
(i) is not authosised as a financial services provider; and
(ii) is not exempted from the application of this Act relating to the rendering
of a financial service; or
(b) Act as a representative of an authorised FSP, unless such
(i) Is able to provide confirmation, certified by the provider, to clients
- That a service contract or other mandatory agreement, to represent the
provider, exists; and
- that the provider accepts responsibility for those activities of the representative
performed within the scope of, or in the course of implementing, any such
contract or agreement:….” Section 13 of the FAIS act 2002
Definitions: “Financial Service Provider” means any person other than a
Representative, who as a regular feature of the business of such person-
a) furnishes advice; or
b) furnishes advice and renders any intermediary service; or
c) renders an intermediary service……….
“Advice”means, subject to subsection 3(a) any recommendation, guidance or
proposal of a financial nature furnished, by any means or medium to any client or
group of clients- in respect of the purchase of any financial product.
“Financial Product” includes Short term insurance (warranties, Comprehensive
insurance, Top up insurances, Scratch policies) long term Category B (Purchase
Protection plan or Dept. cover)
What constitutes advice?
Advice means:
any recommendation, guidance or proposal
of a financial nature
furnished, by any means or medium
to any client or group of clients
In respect of dealings with financial products, and irrespective of weather or not:
The advice is given while doing financial planning for the client, or
A financial product is sold as a result of such advice.
However, advice does not include giving factual information:
On the procedure for entering into a transaction in respect of a financial
product
In relation to the description of a product
In response to routine administrative queries regarding a product
In the form of objective information about a financial product or
By displaying or distributing promotional material.
Note: All insurance products e.g. Comprehensive Insurance, Adcover etc. are
considered to be financial products.
Implications of giving advice
The following need to be in place prior to advice being given:
In general:
Affected areas of the business must be licensed as a financial services
provider (FSP): i.e. a licence must be applied for, granted and displayed.
The “representatives” e.g. F & I Managers must be appropriately qualified
and meet the necessary Fit and Proper requirements before being included
on the Register of Representatives.
A compliance officer must be appointed.
The appropriate Code/s of Conduct must be adhered to dealing with issues
such as:
o Provision of a Needs Analysis
o Disclosures relating to the FSP and relevant Product Providers
o Records which must be kept e.g. record of advice given to clients
Complaints procedures
Key individuals
Key individuals are defined as being individuals responsible for managing and
overseeing the provision of financial services by the company. They are also
required to meet the Fit and Proper requirements related to the relevant product
subcategories and need to be formally approved by the FSB prior to assuming the
key individual role. For obvious reasons a key individual cannot be supervised. The
key individual is responsible for the FSP’s operation and compliance with the FAIS
legislation. Key individuals must ensure that:
Only those representatives that meet the Fit and Proper requirements
provide financial services to clients
Adequate record-keeping systems and controls are in place to record the
advice and disclosures provided to the client
Supervision structures are in place for the representatives that do not meet
the experience requirements as defined in the Fit and Proper
Operational compliance monitoring processes are in place
Complaints processes are established and followed by all affected staff
The key individual may delegate some of these responsibilities, but remains
ultimately accountable for any incidents of non-compliance with the FAIS Act in
their areas.
What is the link between FAIS and financial product subcategories?
FSP license categories are subdivided according to the products that are sold or
serviced. The sub-categorisation provides the link to the Fit and Proper and the
required qualification levels per product type. Only those staff who meets the
relevant Fit and Proper requirements may continue to sell or supervise the selling of
that particular product type.
Fit and Proper requirements
The Fit and Proper requirements cover the following key areas:
Honesty and integrity (Applicable to key individuals and representatives)
Competence (Applicable to key individuals and representatives)
Competence is currently the main focus of attention and deals with the issue of
educational and experience requirements. The requirements depend on what type of
products the FSP markets / sells. In the business’s context, this would be short-term
Personal and Commercial Insurance lines, together with long-term category B
product e.g. Credit Life
The resulting requirements are as follows:
Minimum entry requirements:
Grade 12 / Matric or similar level of education
Further requirements to be met within the next three years:
Post school diploma level qualification or other program providing 60 credits
at NQF level 4 (National Education Measurement System)
FAIS imposes conditions and restrictions if the representative or key individual does
not meet the Fit and Proper Requirements. The table below takes you through
broad conditions and their consequences.
If Then
A person does not meet the Fit and
Proper requirements i.e. The
representative or key individual does not
have Matric or any other recognised
relevant tertiary qualification
That person is prohibited from
functioning as a business manager.
A person only meets the minimum Fit
and Proper requirements.
That person has 3 years in which to
attain the further requirements
mentioned above.
Circumstances change for a person who
is a Representative or key individual so
that the “Fit and Proper” status is in
question.
That representative must declare the
changed circumstances to F&I
Management Solutions e.g. ITC listing.
Compliance Officer
Any FSP that has more than one key individual or representative is required to
appoint a compliance officer (approved by the FSB). The compliance officer reports
on the level of compliance, but it is the responsibility of the key individual e.g.
Regional F & I Managers to ensure compliance.
The compliance officer is also involved in the handling of complaints and other
areas of non-compliance together with the relevant regional manager.
Penalties and Offences relating to Non-Compliance
The Act’s penalties are serious, but equally serious is the reputational risk and
client dissatisfaction, which can result from the various offences listed below.
A person will be guilty of an offence and liable, on conviction, to a fine not
exceeding R1 000 000, or to imprisonment for a period not exceeding 10 years, or to
both a fine and imprisonment, if that person:
Renders financial services as a representative for or on behalf of a person
who is not a licenced FSP
Acts as a representative for a licenced FSP without being able to provide
confirmation, certified by the FSP, that he or she may render financial
services for or on behalf of the FSP, and that the FSP accepts responsibility
for such services i.e. does not provide the client with mandate / letter of
authority
Fails to maintain all required records
Carries on any activity that has been declared to be an undesirable practice,
or fails to comply with a direction issued by the Registrar in this regard,
within 60 days
Deliberately makes a misleading, false or deceptive statement , or conceals
any material fact from a client
Makes an unintentional false or deceptive statement, or conceals any
material fact from a client, the ombudsman will place the client in the
position he thought he was in, i.e. the dealership pays the claim as per the
clients belief.
Section 13 (1) (c)
“13 (1) A person may not -
(a)…………….
(b)…………….
(c) render financial services or contract in respect of financial services other
than in the name of the financial services provider of which such person is a
representative.”
The FAIS Act, subsequent to the introduction of section 13(1)(c), further provides that a
representative may only render financial services or contract in respect of financial
services in the name of the FSP of which the person is a representative.
You are now rendering a financial service in the name of Dealer Financial Services CC,
and you are registered with the FSB as our representative. You will need to follow the
procedures set out for you to remain compliant.
2.1. Sales process
2.2 Delivery Process
Client introduction
Introduce yourself as the representative of
the dealership for all financial products
sold by the dealership and are there to
assist the client with respect to his financial
needs.
If estimation of installments for a given
rand value, you may quote the client, do
not make estimations or discuss insurance
beyond factual information. Work on a
rate that is easily achievable as the client
can hold you to the quote.
Determine if the client wants a quote or if
he is trying to estimate his installments.
Alternatively is the client paying cash?
Written quotes on installments and
quotes on insurance may only be given
after you have obtained an approval or
obtained all relevant information to
obtain a formal quote from the insurers.
Written quotes on finance installments
are binding, the client can come back to
us if the contract installment is different
to a quote he has from you.
Take the clients credit application and
relevant information for an insurance
quote. Have the client sign the
application authorizing the submission of
his information to the relevant houses.
Obtain copies of ID, Drivers, Proof of
income and proof of address and verify
there authenticity.
Complete the OTP and in the process offer
all relevant accessories to the client and if
necessary explain OTR charges etc.
Full in a needs analysis for the client in
respect to financial products required and
quote the client the various VAP. Quote
both the effects on his installments and
the upfront price Add products sold to
the OTP and complete the needs
analysis, complete comments and reason
for non acceptance of products not
wanted
Obtain bank approval and get back to clients
with a final quotes on insurance and relevant banks approval criteria such as rates,
deposits and periods of finance and any
other changes the banks may have made to
the original application
Confirm client acceptance and have client
pay a deposit. Authorise the work on the car
to commence. Request the client’s contract, and refer to your original quote to ensure
agreement, confirm any discrepancies with
the client.
If the client is paying cash or alternate finance, determine that the method of
payment is acceptable to the dealerships
company policy i.e. no credit card payments in excess of R1000. No cheque payments in
excess of R5000. etc. (no the companies
policy)
2.3 Post Delivery Process
On the day of delivery confirm with the client method of payment of deposit
(bank cheque or EFT or cash) get confirmation of insurance if not insuring
with you. Remind the client to bring any documentation still out standing.
Prepare all documentation (complete everything you can and have client
complete the rest before signing) Prepare an invoice in the name of Dealer
Financial Services CC for any financial products sold. (Split invoice
Procedures)
Review the contract with the client and have him sign all relevant pages, including all
VAP documents. Check the client has signed the Needs analysis and confirmation of
receipt of all documents and give him copies of all documents. Upload all documents via
Signio or Seriti for pay out. Your Record of advice needs to be saved on this system
aswell as printed and filed, we require 2 copies for safe keeping.
Complete the various sections of the contract and send in to the bank for
payout with confirmation of Insurance and all other verified documents
required by the bank. Follow up to ensure the bank has paid the transaction.
Check the payout confirms with the outstanding debtor less the DIC (kick
back) earned if not check why (may be an item not invoiced). You must
confirm this as it is your only check if something has gone wrong.
Apart from the Audit requirements
of the dealership, F&I managers are
responsible for keeping there own records of the following, for FAIS
regulations. This information needs
to be kept in duplicate. One Electronic and one hard copy in the
dealership.
Items required on FAIS file
1. Verified ID and Drivers (no Faxes)
2. Record of advice giver signed
and copies of phone calls if available
3. Copies of quotes given
4. Signed copy of application and or telephone conversation
5 Copies of all VAP proposals,
contract and confirmations of cover
DOC must be kept with record of all products sold per client and relevant
stock no (or other reference no.)
You need to be able to cross
reference from your DOC to the
various Bordereau’s and or invoices from the insurance companies and
back to the dealerships accounts.
Record must be kept of all post sale
enquiries relating to the clients
VAP purchased and requests to cancel change claim etc. Record of
response and if referred to the
insurer get info of outcome from insurer.
Record of all complaints must be
kept on file the response and hopefully the resolution of the
complaint and if not referring the
client to the compliance officer and
or Ombudsman.
2.2. Signed OTP’s
Much debate has taken place as to the value of having a signed OTP on file. In many
instances, signed OTP’s are kept on file, but unfortunately the OTP has usually
been amended by either the F & I or the salesperson and not subsequently initialed
by the client, which effectively nullifies the record. The client by signing off the final
OTP thereby agrees to the inclusion of extras and related additional costs upon
which the invoice to the bank is based. If the client takes or request for products to
be added after the conclusion of an OTP Write out a separate OTP and attach proof
of request e.g. signed proposal form, warranty book or copy of cheque.
The figures on the OTP should ultimately correspond to the figures on the contract.
2.3. Letter of Authority / Introduction
There are a number of disclosures which have to be made to the client. In order to
minimize the amount of time the F & I has to spend on these disclosures, we have
built them into the letter of introduction – a copy of which is given to the client for
them to read in detail.
The following key issues are covered in the letter and therefore failure to provide
the letter to the client or get the clients signature effectively means that we have not
met the legislative disclosure requirements:
FSP Info
F & I particulars
Company responsibility for F & I’s activities
F & I’s product accreditation
Complaints and compliance department contact details
Client signature to acknowledge receipt of the above information
2.4. Verification of ID’s and proof of address
Although not directly a FAIS requirement, but rather a FICA requirement, ID’s
and driver’s licences have to be verified. This is done using the UV lights usually
situated in the F & I’s office. In addition, it is suggested that the F & I check the
signature on the drivers licence against documents signed by the client to confirm
that they are dealing with the correct person.
Banks often also require the verification of the clients address and therefore the
F&I should get a copy of the client’s utility bill or other proof of address before
delivering the vehicle. The same applies to taking a copy of the client’s pay slip.
NB: DO NOT VERIFY A FAX OR PHOTOSTATS THAT YOU HAVE NOT
SEEN THE ORIGINAL EVEN IF IT IS STAMPED BY A COMMISSIONER OF
OATHS.
2.5. Needs Analysis / Advice Record
2.5.1. Client Portfolio Information
The legislation requires that the F & I must identify the client’s existing products
before recommending any products to them. This is done to ensure that we do not
duplicate products unnecessarily.
In many cases, the client’s response to the question regarding their existing life
cover has enabled the F & I to successfully sell the debt protection product eg:
The F & I usually will get one of two responses from the client:
“It’s none of your business, I am buying a car” – in which case the F & I
simply indicates on the advice record that the information was not available
from the client
“I have more than enough life cover” – in which case the F & I can point out
that most client’s are under this impression, however these funds are
typically tied into the estate and therefore would result in the vehicle being
repossessed before the estate is wound up – hence Mr. Client, the only reason
Insurance Products, Product
Information, Needs analysis and
Waiver Document
Categories available %
Products available &
% commission earned
by Auric Auto
Recommended
Yes No
Agreed
Yes No
Details of recommendations
and customers decision.
Short Term insurance
Existing cover
Yes or no
NCB:
Private or
Business:
Details
12.5%
12.5%
12.5%
12.5%
12.5%
Comprehensive
Top up insurance
Deposit Cover
Smart
Mechanical Warranty
Category of cover
offered
Long Term cover
Existing cover Yes:
Details
22.5%
Credit life cover
Short-term Commercial lines 12.5%
Insurance company receiving more than
30% of our business
Name Reason
for asking is that there is a product which will settle the vehicle immediately
and does not form part of the estate…
*Please note that this section of the needs analysis is for the client’s existing products,
not the products which you have sold to the client.
2.5.2. Recommendations to clients
A client typically cannot make a decision unless advice / recommendations have
been made to them. The details of which are recorded in the recommendations
section of the advice record. It is also important to note that this section cannot be
pre-populated as different recommendations would be made when financing a
vehicle versus a cash deal. If pre-populated, then the FSB would argue that we could
not have taken the clients existing products into consideration if we had already
decided on the products before the client entered the office.
Business managers are required to offer clients short-term comprehensive products
even if the client already has their own insurance. There is an obligation on the
business manager to ensure that the client is getting the best and most appropriate
cover.
The F & I are obliged to offer all relevant products for which they are accredited
e.g. Alexander Forbes and McCarthy insurance. Do not simply offer one because
there are targets specifically in place for that product.
2.5.3. Client decisions
For each recommendation, there must be a corresponding decision by the client on
weather they have agreed to take the recommended product or not. The
recommendations and client decisions should correspond at all times.
By recording the above information, we can challenge clients when they claim that
products were not offered to them or that they did not choose to take a particular
product.
2.5.4. Plan types It is essential that the plans which the clients have chosen to take are recorded in the
needs analysis. This prevents the client from arguing that the plan they were finally
issued with, was not the one that was discussed during the interaction with the
business manager.
Failure to record the plan type can result in the business having to pay out shortfalls
between the different levels of cover provided by different plans.
2.5.5. Disclosures in the needs analysis document
Important Information This contains disclosures and other legal requirements, some of which will appear here or indicate where it is in more detail elsewhere.
Chantal Poyo of Auric Auto BMW an authorised representative employed by Auric Auto BMW. Chantal Poyo may give advice or render intermediary services to you in respect
of Short-term insurance personal lines, Long- term insurance category B. Chantal Poyo has met the fit and proper requirements of the FAIS act and is therefore qualified in terms of
her experience and qualification to give you advices on the financial products being sold to you and is accredited to represent the products being sold to you. Chantal is not working
under supervision. Chantal is employed by Auric Auto BMW, and receives 100% of her income from Auric Auto. Auric Auto accepts responsibility for any advice given involving
financial products sold by Chantal. BMW Financial Services has a rewards program that incentives Chantal on the number of financial products sold on behalf of BMW Financial
Services.
Auric Auto BMW. is a licensed financial Service provider (FSB licence No:8018) There are no special conditions attaching to this licence. This dealer does not hold shares in any
insurance company and no insurance company holds any shares in this company. Auric Auto BMW complies with the Short and Long term insurance acts by having a mandate from
all products suppliers to sell these products proposed to you. The dealership has not purchased a guarantee as security for the premiums which we collect and pay over to product
suppliers on your behalf.
In the event of a complaint: If you have a complaint regarding any financial advice given by our representative please contact Malcolm Herselman on 021 6701102 and
submit your complaint in writing to [email protected] or FAX: 021 6701195. We will respond to your complaint within 48 hours explaining the full complaints
procedures and an adequately trained staff member will be assigned to the reasonable resolution of your complaint. We will endeavour to resolve any dissatisfaction within a
reasonable time period. Should we fail to satisfy your complaint to your satisfaction you have the right to approach the ombud for financial services, Mr. Charles Pillai
(012)4709080 or [email protected]
Compliance Officers Details: Our FAIS Compliance Officer is Mr. Geoffrey Forrester who can be reached on 0836574747 or e-mail on [email protected].
Please refer to the policy documents for the following: Name, nature and extent of material terms of the product. Details of special conditions, Exclusions; Excesses or restrictions,
Contractual Relationship with the insurer, Premiums, Payment obligations, Manner and frequency; Consequences of non-compliance; Remunerations, Commission, Fees and
incentives paid and person liable for payment .Guaranteed minimum benefits or other guarantees of the product. The risks associated with the product. Commissions are earned by
the company at the following % of premiums paid, Short term insurance products relating to Motor vehicles are at 12.5%
Declaration by Client: - An analysis of my insurance needs relating to the purchase of a vehicle was conducted; - The above data is an accurate reflection of my financial position
and future insurance needs; - Recommendations made are based on the above information; -all documentation was completed prior to me signing; -I shall seek my own tax
consultant and am aware that Auric Auto is not qualified or accepts any consequence of advice given relating to tax.
I understand the financial implications of my decision to implement / not to implement the recommendations of the F&I manager. Accordingly I shall make and be responsible for
all decisions relating to the advice given. I furthermore warrant that any assumption made by the advisor has been disclosed to me and that I accept that these assumptions are
reasonable.
Please mark the relevant statement.
A full satisfactory needs analysis was not completed in light of the circumstances surrounding the case.
A single satisfactory needs analysis was completed there may be limitations on the appropriateness of the advice provided
And I have taken care to consider the appropriateness of the advice considering my objectives.
I have exercised my freedom of choice entitlements; and I have not been coerced or induced in any way in the exercising of my choice. All documentation has been
completed in full before I have signed. I have read and understand the Statutory Notice I understand that compliance with the Financial Intelligence Centre Act is required,
and will provide all required documentation.
F&I Manager: _Chantal Poyo_________ F&I Managers signature_______________
Client name: _________________________ Client Signature: ___________________
Date: ________________ I acknowledge that I have received a copy of this needs analysis
and record of advice
I have received the following documents: Yes No
1. Copy of bank contract
2. Warranty
3. Purchase Protection Plan policy documents
4. Top up and /or Deposit Cover policy documents
5. Comprehensive Insurance details 6. Statutory notice to long and Short-term insurance policyholder
Copyright Dealer Financial Services C.C. All rights reserved. Customer information folder.
X
X
The needs analysis contains a number of additional disclosures which we have to
make to the client in addition to those in the letter of authority. These include:
Type of financial advisor – there are differences in the responsibility
assumed for contracted staff as per employed staff.
Confirmation of product accreditation and financial experience
Confirmation that DFS is not biased toward any specific product provider
based on vested financial interests or non-cash incentives etc.
Confirmation by the client that the F & I has provided the necessary
information about the products recommended and selected
Confirmation by the client of the accuracy of the information in the needs
analysis
It is therefore critical that we get the client to sign the document to acknowledge
having received this information, together with providing them with a copy of the
document to avoid the F & I having to explain the disclosures in detail while the
client is sitting in their office.
2.5.6. Client signatures and initials
See the comments above. A needs analysis without the clients signature, effectively
nullifies the needs analysis. The needs analysis must be dated according to when the
advice on the relevant VAPS was provided e.g. where the needs analysis is
completed telephonically, the document would be dated according to when the
telephonic discussion took place – the document must however still be signed by the
client when they take delivery of the vehicle. Where the F & I fails to see the client,
the following options should be attempted:
Fax the needs analysis to the client for their signature and retain signed copy
or alternatively retain the fax confirmation sheet to show that the
documentation was sent to the client. Record the conversation and make note
on the needs analysis of the date and time for future reference.
Request that the sales person gets the client to sign the needs analysis when
the vehicle is delivered off-site (not ideal)
The client by signing the needs analysis is agreeing that they have received the
necessary legislative disclosures contained in the needs analysis, together with
confirming their decision on the products that were offered.
2.5.6. Exceptional cases for the non-completion of the needs analysis
The legislation allows for two exceptional cases for not completing the needs analysis
in its entirety namely:
If there was insufficient time to complete the analysis (generally not accepted,
as the F & I can usually contact the client telephonically if necessary)
If the client refuses to provide the necessary information e.g. cash client that
refuses to let the F & I do the needs analysis
These options can only be used as a last resort, write this across the analysis sheet
and have the client sign somewhere on the sheet.
2.6. Quotes
The quotes not only provide the client with premium information, but also include
in many cases legislative disclosures including the excesses, admin fees etc.
therefore, by not having a signed copy of the quote, we are unable to confirm what
figures and information were discussed with the client.
In addition, the quotes must be signed by the client as a way of acknowledging that
they were provided with the relevant information needed for their decision making.
The client will either sign the quote as part of the acceptance process or
alternatively the F & I will put a line through the various pages of the quote and get
the client to sign, acknowledging their rejection of the recommendation.
There must be copies of the signed quotes on file whether accepted or rejected for
all recommended products.
2.7. Application Forms
Application forms must be completed correctly. It is an offence to get the client to
sign a blank or incomplete form. In addition, in certain of the VAP booklets note
that the relevant commissions and fees have to be filled in on the form as part of the
product disclosures.
It is important to note that deliberately recording the client’s information
incorrectly on a finance application entitles the banks to recourse against us and not
just the client i.e. the deal can be uplifted and the dealership forced to pay the
relevant bank costs.
2.8. Confirmation of Cover
Confirmation of short-term insurance cover must be obtained and kept on file for
all financed deals. You may request proof of cover on cash deals, but the client
cannot be stopped from taking delivery of the uninsured vehicle (cash deals). The
needs analysis should however clearly indicate that the risk was identified and that
products were offered to the client to mitigate the risk, but the client chose to
assume the risk.
2.9 Checklist
3. Risk Management
It is the duty of Dealer Financial Services to ensure that as far as reasonably
possible, the risk that our clients, product suppliers and other providers or
representatives will suffer financial loss through theft, fraud, other dishonest acts,
poor administration, negligence, professional misconduct or culpable omissions, is
eliminated. This means that you as an F&I manager may only represent / sell
financial products that Geoffrey Forrester has approved for you; these products are
listed on your financial needs analysis, should there be any change in the product,
such as pricing, period of cover, limits of cover etc. Inform Geoffrey Forrester in
writing and stop selling the product until written confirmation is received that the
product has not changed the risk to the client.
Record of all policy documents received and sold must be kept up to date to enable a
reconciliation of all documents sold, this must reconciled with the invoice from the
insurance company every 15 days, this is to comply with the Short Terms Insurance
acts procedures of holding customers funds. All dealers being represented are to
carry IGF guarantee as per the Short terms insurance act.
You as an F&I manager may not receive any commissions incentives “gifts” etc.
from any product supplier.
4. Acceptance of the FAIS compliance and sales process requirements.
I the undersigned hereby accept these policies and procedures.
Signed: _____________________ Date: ___________________
Name: __________________
