Now that the MPs’ expenses scandal seems
to have died down and we await the next revelations on public
figures taking advantage of our taxes, maybe it’s time we looked a
little closer with regard to spurious payments that might not
withstand much scrutiny.
In the competitive world that is point-of-sale
(PoS) finance, where major finance houses fight for prime business
from dealers keen to maximise income, is it really as clean a fight
as we might like it to be? I don’t think so, and perhaps now is the
time make a change.
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I have run a brokerage at the heart of PoS motor
finance for nearly 20 years, and have seen many different
approaches to winning business over what has been an ever-changing
dealer landscape. I am a firm believer that brokers can and should
play a very constructive part in the whole dynamic of this
marketplace. Alas, as I have previously written, this is not always
the case, and never more so do I feel aggrieved than when the
subject of “incentives” is mentioned to me.
So what do I mean by “incentives”? I certainly
don’t mean legitimate competitions run by finance houses or reward
schemes where the management buys into it and signs authorisations
for their staff to participate. There is nothing wrong with that –
we do it ourselves. What I mean is under the table payments by
brokers to dealer staff to “buy” deals, in circumstances where the
dealership loses out financially because of the toxic influence of
vouchers, often in very high amounts for each deal.
At DSG we absolutely abhor this practice and so
should every finance house, as it is not a subject where a shrug of
the shoulders is the right approach.
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By GlobalDataBusiness managers and indeed salesmen
often have the discretion to decide where a deal is to be placed.
Some brokers will view this as an opportunity to influence that
decision by offering to pay over undeclared vouchers. The
temptation can sometimes be too much and the net result is that the
dealer ends up earning less while the salesman does very nicely,
thank you. Inevitably, when management eventually discovers this
systemic theft, it is linked to specific deals, which in turn
reflects unfavourably on the finance company. Even though the
finance company had no knowledge of the sordid transaction, it is
almost always perceived to be guilty by association.
This is a subject that needs to be dealt with by
finance houses and can be done so very simply, by making it clear
that incentive payments to staff without clear approval from
management will result in termination of the broker facility.
In an age where there are great opportunities for
professional brokers to play a key role in the marketplace using
technology or innovation or simply hard work, there should be no
place for this lazy practice from brokers who should know
better.
The author is managing director of
DSG Financial Services
