The new “Consumer Duty” principle announced by the Financial Conduct Authority (FCA) will mean many dealers and motor finance companies need to track customer journeys more closely in the future.
James Tew, CEO at motor retail technology market leader iVendi, warned that the shift to “putting customer needs first” represented a genuine change in the way that the process of choosing a finance solution needed to be presented and recorded.
“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.
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“It’s 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.”
Tew added that it should also be noted that the FCA had explicitly indicated that the move to Consumer Duty had a strong relationship to how personal finances would be affected by the expected forthcoming recession.
“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.”