Life after the FCA regulations has proved uncertain and onerous for some car dealers, but F&I service providers will tell you that while some have floundered, others have flourished.
Opinions and experiences of the move towards a system that places “interpretation of the guidelines” at the heart of the sale of finance and add-on products may be mixed, but the importance of doing the deal remains.
Get it right and the rewards are great. So great, in fact, that the FCA may yet look into the commission car dealers make from finance sales.
At the recent DealTrak F&I Conference, Barclays Partner Finance managing director Mike Britton said FCA scrutiny of car dealers’ commission on F&I products will happen “quicker than we think”.
Meanwhile, Matt Dyer, chief executive at ITC Compliance, said he felt dealers making £3,000 to £4,000 on finance deals “make too much” from the F&I side of the industry.
Whatever the FCA’s future stance, the current focus has to be on compliance with its guidelines and the recording and documentation of each transaction to ensure dealers can be audited at a later date.
DealTrak has partnered with ITC Compliance to offer its dealer clients assistance with FCA compliance, but they still have to do the right thing by the guidelines.
Efforts to ensure customers are treated fairly are increasingly leading to the adoption of online tools that can aggregate a customer’s finance options before their eyes – putting power back into their hands.
Finance options and potential PCP monthly payments now appear front and centre on dealer homepages and discussions often start far earlier in the sales process in an effort to gain a good understanding of a customer’s needs.
Mike White, commercial development manager at Mapfre, suggested this could be taken a step further with the introduction of video. He said: “We know that many dealers are restricted in what leaflets and other material they can have around the showroom by their manufacturer partner, so why not use video?
“Imagine a video guiding you through your finance options as you grab a cup of coffee while your test drive car is prepared.
“You don’t have to wait until you are sitting face-to-face, ready to do the deal, to speak to them about their financing options.”
White highlighted that many top AM100 retailers and manufacturers now have finance calculators on their websites and can gather customer data to ensure that those predetermined criteria are accessible at the dealership.
Equally, he highlighted the need to contact customers after their visit – by email, social media or SMS – to provide additional information on relevant finance, GAP insurance or extended warranty products.
He said: “What we need to understand is that the customer can do all their research at home now, or even on the move. The power now lies with them.
“The dealer has to ensure customers receive good service and get the information they need about the products on offer.”
Although PCP is the clear market leader – many dealers claim 80% penetration on new vehicle sales – the product is evolving, with a focus on customer convenience.
Hitachi Capital Motor Finance recently partnered with Vertu Motors to launch a Buy Now Pay Later 0% deal with a six-month deferred period.
Toyota, meanwhile, has moved to make its finance offering more transparent for PCP and PCH customers, launching a new My Finance application that allows them to view their finance agreement, obtain a settlement figure, make payments, change their personal and bank details and request changes to their payment date online.
Doug Gillies, Toyota Financial Services managing director, said the changing market meant “people demand easy access to their financial affairs at any time”.