7:59 am, June 3, 2014
DEALERS could damage their long-term relationships with customers if they do not learn to handle the new FCA affordability test in a sensitive manner, warns iVendi.
The company says meeting the FCA’s requirements in this area is likely to involve asking for much more detailed information about a customer’s personal finances than existing motor finance applications, points out the online motor technology specialist.
Difficult areas covered are likely to include information about income and any possible future personal changes in circumstance – leading to potential discomfort on the part of customers unused to being asked these questions in a dealership.
CEO James Tew said: ‘This type of detailed financial questioning is really a new area for dealers. It is unlikely that your motor finance provider has been using an application process that employs anything other than fairly blunt criteria designed to assess whether a potential customer can actually afford the car that they want. Filling in the average application form has generally taken a matter of minutes.
‘Under the new FCA regulations, the process will be more sophisticated and designed to assess whether the customer can sensibly afford the payments on the vehicle and finance product that they want. This means building up a more complete picture of their finances and taking sales or F&I staff into areas that are probably new to them in terms of knowing how to deal with customer appropriately.’
Dealers needed to be aware of the potential pitfalls of this kind of customer handling and a much higher degree of sensitivity would be require, Tew added.
He said: ‘In essence, dealers need to treat the process with more gravity than has been usual and perhaps have a room set aside where information can be gathered in a calm atmosphere, rather than sitting at a desk on the showroom floor with people milling around.
‘The manner of dealer staff also needs to be much more serious and sensitive than has been the case with motor finance applications up until now. It is a question of finding a tone that makes the customer comfortable about passing over detailed personal information.
‘Getting this right could be a key factor in ensuring that you do not damage long term relationships with customers, and dealers and motor finance providers may want to look at whether training and detailed guidance are needed.’
