In the second in this series for Motor Finance,
Spencer Halil looks customer-focused sales processes.


Motor retailers and lenders will have to put up
with a classic piece of UK government compromise from 1 June, when
the Consumer Credit Directive (CCD) regulations come into effect

The government has agreed to extend the transition
phase because of a delay in laying the final draft of the CCD
before parliament. It will run until 31 January 2011.

This means there will be an eight-month period when
it is possible that different lenders could implement the new rules
at different times. However, I firmly believe our industry should
use the extra time to coordinate the implementation of the CCD
regulations, as far as possible, so as to minimise the potential
for disruption.

Nonetheless, the extended wait before everyone can
be sure they are on a level regulatory playing field will doubtless
add to the pressure on dealerships in 2010.

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Putting customers first

One of the key goals of consumer credit regulation
is to ensure customers get a fair deal. The CCD rules and Office of
Fair Trading guidance require sellers and lenders to give customers
adequate explanations of the different finance options available
and to ascertain whether they can afford the payments.

If they don’t, it will be easier in future for
customers to complain or withdraw from agreements should they
discover, post-sale, the seller withheld information about the
product or the availability of other options.

A comprehensive and competent qualification process
will be vital. Dealers and lenders must ensure customers are
absolutely clear about what finance they are buying; why they are
buying it; and that they will be able to afford it for the duration
of the agreement, as far as can be ascertained.

Taking the time to make customers aware of all the
options should not detract from the ability to make sales. The
chance to go through the options face-to-face in the showroom is
actually an advantage for the dealer, since options such as PCP are
not generally available through direct lenders or banks.

It is also a great opportunity to diversify income
by selling-in additional products such as the growing range of new,
easily-managed, more readily compliant insurance products.