Compliance Management System or Compliance Training?

What is the important and significant difference between a compliance management system (CMS) and compliance training? Why is one preferable to the other in the compliance space for dealerships? A “system” has been defined as describing a set of connected parts forming a complex whole or an organized set of procedures by which something is done. The key concept centers on the “connectedness” of the components forming a larger set. “Training,” on the other hand, is defined as the action of teaching a particular skill or behavior.

The CFPB has said that they expect every large participant (including “nonbank,” i.e. auto finance companies) to have a CMS in place, not just training. Auto finance sources, in turn, require your dealers to implement a CMS in their stores. In the event a finance source discovers that a dealer has failed to implement a CMS, drastic measures are sure to follow. There is a popular misconception that “training = system,” rather than the more accurate description: “system > training.”

The Four Prongs

The CFPB has outlined at least four prongs, or interconnected parts, that form the larger whole of a CMS: policies and procedures, training, audit and complaint management. As you can see, training is just one component of a larger system of compliance, but it is not a “system” unto itself.

Many dealers are tempted to say they train their staff and consider themselves to be compliant. While there may be training, what happens if an issue arises in any of the other three prongs that the CFPB has identified as part of a CMS?

For instance, what if there is a question regarding written policies and procedures, or regarding a customer complaint or a question regarding an audit? What is the process to be followed? Who has supervisory responsibility? How can consistent, repeatable processes be followed?

The answer is that mere training is not enough. You need an interconnected system. Given the high turnover of employees and the lack of up-to-date information around the key areas of legal requirements that dealers face just to sell cars, a CMS is the only sure way to stay current and have consistent and repeatable compliance processes embedded in the dealer workflow.

One More System Won’t Hurt

Dealer workflow is no stranger to systems. The “S” in “DMS” stands for “system.” Sales of vehicles, ancillary products or parts and service are frequently tied into menu-selling systems. These systems integrate all the disparate items under one “roof” so all opportunities are fully and completely explored. Doesn’t it make sense to also use a system to integrate all compliance expectations and processes under one “roof”?

A CMS should serve to automate, making sure all employees receive lessons appropriate to their job duties. A CMS should generate reports regarding employees who have passed (or not passed) their training and the time required to do so. A CMS should establish consistent and repeatable processes to address problems and issues as they arise and can also serve to suggest revisiting procedures and training to lessen the likelihood of the same issue coming up repeatedly.

Why would a dealer consider implementing training rather than a complete CMS? The only answers that spring to mind are price or lack of knowledge. The old adage that if it is worth doing, it is worth doing well applies here. Training is a halfway (or perhaps even a 25%) solution to compliance. If you read any compliance headlines, you can easily see that the penalties are in the millions of dollars. Price should not realistically be a deciding factor.

After reading this article, you cannot claim a lack of knowledge of the difference between mere training and a complete compliance management system. Some of you may be familiar with the television and movie series “Star Trek.” If so, you are likely familiar with a villain named the Borg, which is collection of human/cyborgs linked together in a hive called the Collective. The Borg are known for several quotes and I would like to paraphrase one here: “Resistance is futile. You will comply.”

While I am not necessarily equating the CFPB with the Borg, compliance in some format is here to stay and best practices mandate that a complete system is needed to address this requirement. In the case of system versus training, the undisputed evidence favors system over training; there is no valid excuse or justification for adopting an incomplete compliance solution so go out there and get a complete compliance management system today!