Author: Richard Jones (pictured), managing director, Black Horse
The third area of focus in my look at the FCA’s motor finance report is lender controls and the frameworks operated between lenders and intermediaries to monitor risk.
The FCA feels some lenders are not taking reasonable steps to manage intermediaries’ adherence to the rules in the Consumer Credit sourcebook (CONC).
I believe the regulator is signalling that lenders cannot assume FCA-authorised intermediaries are fully CONC-compliant – we need to have oversight of the sales processes, the information provided to customers, and to have confidence that customers are getting the right outcomes.
There are a number of angles to consider:
- Training and guidance – lenders should ensure intermediaries have access to up-to-date product guides and training materials, including reinforcing some of these as mandatory, to ensure consistency on regulatory requirements
- Tools and management information – lenders can support intermediaries with accessible management information to help them self-regulate
- Feedback loops – via programmes such as mystery shopping or customer contact post-sale, lenders can understand who is performing well and who needs more support. This should form part of an ongoing dialogue and drives forward continuous improvement and the sharing of best practice in the customer journey.
At Black Horse, we provide services and support in all these areas, helping our intermediaries to evidence their compliance with CONC, providing a vital second perspective to their own internal control and oversight. It’s an important value-add.
I also want to touch briefly on the FCA’s very recent general insurance (GI) publication concerning GI manufacturing and distribution.
The FCA highlighted risks that can lead to customers purchasing inappropriate products, paying excessive prices or receiving poor service. It challenges whether insurance products offer good value once costs of
distribution are factored in, including products distributed through the motor market – for example, GAP and other insurance products offered alongside car-buying.
Next month, I will share my thoughts on how to define value for such products, helping motor retailers to think about how to respond to this important FCA review.