According to the Financial Conduct Authority, only 36% of UK adults believe they are treated with honesty and transparency by financial services firms. Sadly, the automotive industry has long suffered from a negative perception grounded in a lack of trust identified in the City regulator’s Financial Lives survey, but the newly enforceable Consumer Duty provides an opportunity for the motor finance industry to prove that its focus is on ensuring good outcomes for all customers, especially the most vulnerable. 

Joanne Robinson

The FCA has honed in on vulnerable customers. The guidelines and recommendations provided to businesses in the lead-up to the Consumer Duty enforcement deadline at the end of July 2023, suggested that firms should review products or services to identify any features that could potentially harm customers with characteristics of vulnerability. 

Consumer duty and better communication

Recognising vulnerability is not a straightforward task as there are various factors at play. It might be someone who has difficulty understanding the implications of a financial agreement, or who has a low credit score and is struggling to secure finance, for example. Many people in the UK fall into this category in some way, especially given the current cost of living crisis. 

That’s why it’s so important to maintain a level of human interaction in the sales and customer service process. The FCA survey found that 7.4 million people have been unable to contact their financial services providers in the past, with the most vulnerable in society most likely to struggle with this. Hence, the FCA guidelines stipulate that businesses should offer responsive customer service and provide clear communication. 

Improved communication must not be restricted to customer service, however – it needs to be adopted by sales teams too. Many customers indeed want to do business online – at least during the initial stages of a purchase. Automation and data analytics have transformed the way we operate as a car finance marketplace, for example, enabling us to provide customers with quick decisions and clarity around finance approval, available APRs and the selection of lenders. But while technology is integral to the offering, it cannot entirely replace a real conversation. 

Tech and the human touch 

A telephone chat personalises the service, making sure the customer finds the package that is right for them, and that they’re not alone in trying to understand complex documents online. Long T&Cs and complex jargon can be intimidating to some customers and could be left unread or misunderstood. 

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It is only through human interaction that businesses can pick up on potential vulnerabilities and respond appropriately. For the majority of our customers, a car is not a luxury – it’s a necessity. They might rely on it to get to work, or to meet family commitments. It’s also one of the biggest investments they’ll make. As an industry, we must be mindful of how significant the purchase of a car can be, and of the struggles customers are facing. Empathy and better communication have the power to change the industry’s image for the better – and Consumer Duty might just be the nudge in the right direction to make that happen. 

Who’s finding it difficult to finance their wheels? The vulnerable and the unbanked

How technology can help identify financial vulnerability