ARA, NAF Association reveal initial results of repossession efficiency project

FORT WORTH, Texas - 

Dave Kennedy and Les McCook of the American Recovery Association shared some vivid anecdotes originating from meetings with Jack Tracey and Joel Kennedy of the National Automotive Finance Association along with leadership of close to 30 finance companies with large and small portfolios.

“They saw the hardship that was being placed upon their vendor network. And in being a good business partner and caring about the other side, they are now rethinking their strategy,” said McCook, ARA’s executive director, during the annual Non-Prime Auto Finance Conference hosted by the NAF Association. “What’s important here is this is a beginning,”

That beginning is ARA and the NAF Association using last week’s conference as the springboard to announce the results of their first joint effort to establish a minimum compliance standard for third-party repossession vendors that work directly with an auto finance provider, not through a forwarding model.

Together with a working group of NAF Association bank and finance company members, the leadership of ARA has sought to address the lack of standardization of compliance programs by setting forth the following goals:

1. Create a set of baseline criteria for NAF Association members to use in the oversight, management, and auditing of recovery agents.

2. Produce a standard list of compliance requirements for recovery agents to help them satisfy all of their clients.

3. Streamline the process of third party management for recovery agents specifically, resulting in lower costs for all parties.

Dave Kennedy, who is ARA’s president, shared an analogy with conference attendees in an attempt to summarize the entire situation; one that might have generated extra impact with individuals who have children currently attending a college or university or recently graduated.

“Say you go to college and you get your degree. You go to school at say Temple, and you pass the baseline standards for that degree. But then your employer says, ‘We like you, but we now require that all of our employees to go Harvard, so you’re out of a job.’ That doesn’t make any sense,” Kennedy said.

The initial agreement indicates repossession agencies can complete training curriculum from five different providers, including:  

— Recovery Industry Services Company
— Recovery Standard Training
— Vendor Transparency Solutions
— American Recovery Association
— Recovery Specialist Insurance Group

“The key is to bring efficiency. All of these training programs meet the basic criteria. This is going to save hundreds of thousands of dollars for lenders. They’re all great programs. Now if an agent can prove he has one, it’s going to save hundreds of man hours,” Dave Kennedy said.

“It's an excellent initiative and something that’s going to bring a lot of efficiency and comfort to both sides of the table,” Kennedy added.

Joel Kennedy, an NAF Association board member, former finance company executive and now director with Spinnaker Consulting Group, emphasized the concept of bringing efficiency and addressing potential problems that might be keeping finance companies “up at night.”

Kennedy also pointed out how crucial the input was from an array of finance companies, not just large players dictating the situation.

“It’s all about trying to drive better efficiencies and synergies for the process that we have right now,” Kennedy said. “The whole point is each individual finance company has a responsibility from a third-party vendor management standpoint to make sure they’re managing their own vendors as if it was their own company. With repossessors, there is additional risk involved given the customer engagement.

“What we came up with was a baseline set of standards that can be ascribed to by all of the NAF Association members to say, ‘Here is the bare minimum of what we think you need in order to safely management this relationship.’ There really isn’t any kind of guidance from any regulatory body that says chapter and verse how you manage this relationship and risk,” Kennedy continued.

The resulting baseline standards encompass the key areas of vendor compliance, including:

1. Owner / business regulatory reviews
2. Training
3. Policies and procedures
4. Vendor site visits

“We want to create a significant solution for both sides of the auto-lending and recovery industries,” said Tracey, executive director of the NAF Association. “I look forward to our continuing relationship and mutual problem solving.”

Joel Kennedy closed his portion of conference presentation about this development by delving into how ARA and the NAF Association can forge forward on the current developmental path.

“I think this is the kind of thing that not only can provide guidance to our members to streamline and build efficiencies where we can all spend a little less time schlepping and more time analyzing on the high-value, high-risk targets we can get solved,” he said.

“The next steps are to carry this through and see how far we can take this,” he continued. “Can we collaborate on data? Can we collaborate on sending the field guys to chase information? Can we get into more self-reporting for the recovery agents where we can get the data into a repository and all the members can utilize it?”

Tracey later added, “There are some serious dollars to be saved.”

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