EVERY quarter, I have the privilege of being invited to a retailer committee meeting at Mercedes-Benz in which we discuss topics relating to the market. One interesting recent debate was the role of the FCA. The question was asked: ‘How can you specifically measure ‘‘Treating Customers Fairly?’’’
There is a concern that retailer finance deposit contributions will fall foul of TCF where we offer no cash alternative. Certainly for Mercedes-Benz, we are able to offer a cash allowance which looks the same as a deposit contribution, but we do not advertise it. All prestige manufacturers have strict advertising guidelines that more or less prohibit any marketing of cash discounts due to brand perception, but I suppose the FCA will not care about that.
Any ruling that will enforce manufacturers to advertise both cash and finance deals will inevitably lead to much head-scratching for marketing teams who will still be tasked with driving finance sales.
With mortgage companies now being forced to employ an affordability matrix, it seems only a matter of time before we have to use something similar.
I have no problem with this providing it would replace any existing credit-scoring system.
Therefore, for one deal that you lose due to underperforming in the affordability score, you may recover another from someone who, historically, may have had a weak profile but can afford the payment given the information provided. However, it is likely to be an ‘in addition to’ as opposed to ‘instead of’.
I have touched on insurance product presentations in this column before. I do not think many retailer ‘offer sheets’ are robust enough for TCF. I think many dealers have included insurance products in many deals – cash or finance – and the customers have not been aware. I think we are months away from another PPI scandal, but nobody seems to care.
We now come to the most controversial topic of all: finance commissions. Will finance providers be forced to disclose finance commissions to a customer before handover? Are we soon to see full disclosure of chassis margin as we see in North America?
If the motor trade has to do it, I want to know how much a house builder makes on a new property, or Tesco makes on baked beans. And if that is not possible as these are not finance products, is there not some irony about the current distinction between cash or finance purchases?