Have you got the FSA fully covered yet?
Dealers have so far shown a surprising lack of urgency in sending their authorisation applications to the Financial Services Authority ahead of the July 13 deadline.
I have been talking to a number of dealers recently, and many have told me they believe that they, or their suppliers, have all aspects of the new requirements to sell insurance and warranty products from January 2004 covered.
However, on probing further, there seems to be a general lack of awareness of the key issues surrounding the new rules.
These include ensuring that all relevant demands and needs information is filled in by sales staff for all products; that the correct customer complaints procedure is put in place; that all complaints data is sent to the FSA every six months; and that any or all information the authority requires is easily and readily retrieved.
This means that a simple pen and paper system will be largely inadequate because of the amount and complexity of the information that will need to be retained, and it was for this reason that we developed our own FSA software module to help automotive retailers through the process.
The penalties for non-compliance will be harsh. Once the new rules come into force from January, dealers will face a handling fee of £360 for every customer complaint that is directly received by the Financial Ombudsman simply for handling the complaint – and that's before the nature and costs of the complaint are taken into account. Gaining authorisation is not just about filling in a complicated form – although it is a lengthy process. All staff selling insurance and warranty products must have been trained in accordance with FSA guidelines. And dealers must be able to show a properly thought through strategy of how they intend to control their business and ensure compliance with the regulations.
Accurate records must also be kept to show a clear audit trail.
But, on a positive note, achieving compliance should prove well worthwhile and dealers will miss out on a very profitable business opportunity if they fail to grasp the nettle and act now.
Legally selling insurance and warranty products is, and will continue to be, an excellent way of building a rapport with the end customer, and dealers will be able to exhibit a status and knowledge akin to that of an independent insurance advisor – provided they put in the time and effort now to secure the necessary authorisation.
Su Copeland, marketing and business development manager, Ebbon-Dacs