Charley Smith, chairman of the National Automobile Dealers Association, said the NADA doesn't support legislation to regulate dealer reserves. Smith spoke at a recent Detroit Automotive Press Association meeting.

Regulation is unnecessary because the industry is taking several proactive steps to address the alleged abuses in the F&I office, according to Smith.

"We are active on two fronts: dealer education and consumer education," Smith said. "By educating consumers and making sure our employees are committed to treating customers ethically, we will be doing our part to ensure a level playing field in the automotive credit marketplace."

There are several initiatives to educate consumers with literature about financing. For example, Smith said NADA is publishing "An Insider's Guide to Car Financing" in TIME Magazine that should reach 4 million next month.

NADA's dealer education efforts include promoting its Code of Ethics, encouraging AFIP F&I ethics certification and providing the F&I training video "F&I: Absolute Integrity...100% of the Time."

The competition in the marketplace should also keep financing practices in check. "If ever customers believe they did not get a good-enough deal, they can refinance elsewhere without penalty," Smith said.