10:53 am, September 13, 2022
Dealers and motor finance companies have been warned that they will need to track customer journeys more closely in future after the Financial Conduct Authority (FCA) added a new ‘consumer duty’ to its list of principles.
Motor retail tech firm iVendi says that the tweak has the potential to ‘genuinely change’ the way the motor trade handles its customers.
The FCA says it has added the principle in order to ‘set higher standards and put consumers needs first’.
Coming into force in the next 12 to 18 months, it will mean that firms are required, by statute, to ‘act to deliver good outcomes for retail customers’.
It will mean that all outfit will have to ‘consider the needs, characteristics and objectives of their customers – including those with characteristics of vulnerability – and how they behave, at every stage of the customer journey’.
As well as acting to deliver good customer outcomes, firms will need to ‘understand and evidence whether those outcomes are being met’.
James Tew, CEO of iVendi, says the new rules could change the way that the process of choosing a finance solution needs to be presented and recorded.
He said: ‘The FCA has been explicit that the new principle very much raises the bar when it comes to how customers are treated when being sold finance products – and the motor retail sector must react accordingly.
‘Essentially, it places an onus on dealers and motor finance companies to track consumer activity every step of the way, whether that is happening online or in the showroom.
‘The decision-making process and the information placed before the consumer at every point must be recorded and auditable. Those who cannot do this – and there are quite a number of them, in our experience – run the risk of potential action.
‘We believe that the systems that we offer already meet the requirements that the FCA has outlined but this is an area we are investigating closely and will be discussing in detail with the dealers and lenders with which we work.
‘It is a subject around which there can be no compromise and we are committed to ensuring that the technology we provide does as much as possible to ensure that the new principle is met in full.’
(James Tew, iVendi)
He added: ‘The FCA are anticipating that the cost of living crisis will have an impact on personal finances within the next few years, and want to make sure that customers are receiving the best possible advice, guidance and product choices within that framework.
‘While consumer duty doesn’t take effect for 12-24 months, there is every reason to expect that the FCA will want our sector to up its game as we face what could be the worst recession in a long time. Motor retail should be taking note of this shift in tone.’
