25 Feb 2016 – It has become more and more frequent that we as an industry have been asked to sign service contracts which are one-sided in many respects, providing maximum protections to the financial institutions while exposing our industry to greater liability, even in cases where the financial institutions are solely responsible for the actions that give rise to this exposure.
On behalf of the industry, we have sought to obtain revised contracts designed to ensure that protections afforded only to the financial institutions be afforded to all parties to the agreement. The clearly stated goal is not to take away any of the protections that the agreements afford to the financial institutions, but instead to add protections for the benefit of our entire industry.
Unfortunately, our efforts have been largely ignored, with more than one major institution declining to negotiate a fair contract with us directly through our attorneys.
It is our recommendation that, in addressing service agreements from financial institutions, you retain counsel to closely review the terms of the agreement or at a minimum, challenge the provisions of these agreements to ensure that you have the maximum protections available under the law. This includes, at the very least, a reciprocal indemnity provision and the inclusion of language that does not require you to fund the defense of the financial institution when they are sued as a result of their sole negligence. Entering into these agreements as is exposes us to more lawsuits and financial strain. Moreover, some of these agreements contain terms which are contrary to certain terms contained within your liability insurance policies so that claims you believe to be covered, will not be.
It is in our best interests as a group to challenge these agreements. In doing so, we will force the financial institutions to listen to our concerns and work with us in the preparation of fair agreements.
The Council of Repossession Professionals
CORP Issues Statement on Service Agreement Contracts – Repossess – Repossession – Repossession Agency – Repossessor – Repossession
People join trade groups for guidance. By not naming the names of financial institutions or their forwarders who issue these lopsided contracts, trade groups diminish their value to the members they serve. Not telling your members who and what to avoid and then telling them to seek $$$ legal counsel increases the members $$$ burden and eventually the member chooses to abandon the trade group for lack of leadership. Trade groups tell their members to man up and stand firm—I say its time for the trade groups to realize that the concept of which they were formed (to get their members clients who use their book exclusively is gone). Trade groups can no longer serve two masters (clients and members), you can only serve the one that pays their dues to belong to your group.
Hi Mike,
You are right, people join trade groups for guidance.
There is a really good reason why no names were mentioned. The press release did not come out just because the CORP wanted to say something . It came out as a result of industry unity and actions currently in place.
Trade groups do serve one master and it is their members but trade groups must also have the ability to sit at the table with the clients in order to fully serve their members.
What needs to also happen is that agency owners themselves need to become more vocal and more active in this process. If you yourself have a contract with bad terms then please, come right out and share. The more people who do this then the more people will be listening and as a good friend once told me, pressure makes diamonds.
You know what will really solve this problem? When a bad contract comes out no matter who the client is, ARA, TFA, Allied and RSIG put out a joint statement not only naming the client but saying that they do not support their members signing the contract and list the particular reasons. It should be in a professional manner and handled above board. When a client hits “DO NOT SIGN LIST” and it is made public changes will be made. This is not meant to sling mud but one of the reasons the contracts are out there is because they are never called out publicly. A perfect example to this was a few years back Chase Auto Finance put out a contract that was pretty aggressive in favor of Chase and not for the agents at all. The agents became very vocal with the issues they had and Chase heard them. Everything was done professionally from what I remember and Chase put out a revised contract a short time later that was much better.
To say there is a unified voice now is laughable. As long as we keep the information to ourselves and not share the info we have our voice will never gain strength. This is not meant to be an us against them attitude, but we are partners with the clients not employees, and that is the message we need to get across.