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Two Thirds of Motorists Unaware of Dealer Obligations in Sale of Car Finance

• Lack of consumer knowledge on what information to request from dealers
• Data suggests high potential for mis-selling of F&I products
• Alphera supporting F&I accreditation programme in partnership with the IMI
• Accreditation helps improve customer knowledge, trust and satisfaction

Two-thirds of UK motorists (64%) are unaware that salespeople are required to discuss their financial needs and requirements when purchasing a vehicle on finance, according to new data revealed today by ALPHERA Financial Services.

The findings are the result of a UK-wide consumer survey commissioned by Alphera, BMW Group’s award-winning independent motor finance division. The data highlights the low level of consumer awareness of dealer obligations when selling finance and insurance products. The independent survey was conducted among 1,035 motorists across the UK, and not specifically BMW Group customers.

The survey found that more than half of motorists (58%) were unaware that dealer sales staff are responsible for discussing repayment obligations. The same proportion of respondents were unaware of the responsibility to outline a finance product’s terms and conditions and details of additional charges. 77% of respondents didn’t know that dealers must outline how purchasing a vehicle on finance may affect their credit rating.

The survey underlines heightened concerns about the sale of finance products in the wake of historic mis-selling of PPI (payment protection insurance) by many finance lenders and banks.

Gerry Kouris, marketing manager at ALPHERA Financial Services, said: “Consumers appear unaware that dealers have a number of obligations when it comes to the sale of car finance. This deficit, between a dealer’s obligations and customers’ awareness of their rights, means sales staff must clearly explain every aspect of a finance product, and properly assess the customers’ needs.

“If dealers can address this gap and offer total transparency, they can empower customers to make an informed decision, giving them confidence that a finance product is truly appropriate for them. In the long term this approach will foster greater customer loyalty and more sustainable income for dealers.”

Alphera supporting F&I accreditation in partnership with the IMI

In seeking to improve standards across the industry and enhance transparency in the sale of car finance, Alphera is working with the Institute of the Motor Industry (IMI) to introduce a new accreditation scheme for finance and insurance (F&I) sales specialists – with the first assessments taking place in June.

The accreditation scheme complements established Specialist Automotive Finance (SAF) programmes from the FLA, enabling a more practical application of skills and knowledge compared to more theoretical learning platforms. All participants will need to have passed the standard SAF competence test before completing the IMI F&I Accreditation.

Alphera sees this as a significant step towards establishing consistently high standards in the sale of finance products, helping dealers to improve customer satisfaction and confidence in the transaction process.

The accreditation scheme aids self-regulation to support compliance with Financial Conduct Authority (FCA) rules and guidelines. The FCA recently announced plans to carry out a programme of ‘mystery shopping’ among UK car retailers throughout 2018 to gauge the level of compliance in car finance sales.