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FSA carmaker guidance: Preparation is paying off

The FSA regulations were undoubtedly a cause for concern among many vehicle manufacturers.

With finance and insurance business such an important element of their profit streams, it was essential that they ensured dealers would be able to continue selling their products.

Many agree that the regulations have forced dealers to take a more professional approach to the selling of insurance products, but the burden of administration has also been heavy, as is often the case in a newly regulated environment.

“Dealers have experienced a mixed bag of problems since the implementation,” says Doug Moody, sales and marketing director for DaimlerChrysler Services UK, which encompasses retailers across Mercedes-Benz, Smart and ChryslerJeep – a total of 386 dealers.

“The increased cost and administration incurred has been negative, but where a review of the total sales process has been undertaken and fully understood, this has brought significant overall benefits.”

Prior to the regulations, DaimlerChrysler provided its networks with regular updates on what was required to become compliant and also held seminars. Despite this, not all dealers were ready.

“I think the amount of change had been underestimated by all, and those that started the process late in the day are suffering,” says Moody.

This is a sentiment echoed across the industry. A combination of confusion and ignorance are the excuses used but the FSA regulations are here to stay. As DaimlerChrysler assists those dealers still not up to speed with them, it is also addressing the problem of ensuring that dealers that are compliant are aware of what they need to do to remain so.

#AM_ART_SPLIT# “Everyone breathed a sigh of relief when January 15 was reached and boxes could be ticked. However, many have realized now that this is an ongoing process which requires significant real-time adherence to ensure full compliance,” says Moody.

DaimlerChrysler continues to offer workshops and training courses, both centrally and locally for new starters. These specifically look at the sales process and how the FSA fits in. The aim is to enable dealers to sell better, boosting profits for them and, ultimately, the manufacturer.

“The feedback we’re getting in our customer satisfaction survey is they feel they are receiving more professional and impartial advice, and being offered appropriate products. The demands and needs statement is also well received,” adds Moody.

In June, Volkswagen was forced to turn away customers wishing to buy extended warranties because it had not gained FSA authorization to sell insurance-based products. The embarrassing situation was described by the German carmaker as a ‘temporary blip’ but industry experts believed that VW had not realized that these warranties would be affected. Around 80,000 car owners were possibly affected in the UK.

#AM_ART_SPLIT# The irony was that VW required all its retailers to become fully authorized to sell extended warranty products supplied by other companies.

“Despite us not getting FSA approval for extended warranties, our dealers have been magnificent and they have sought out their own approval,” says a VW spokesman. “We have now managed to gain approval and are in the process of communicating this with customers and dealers.”

BMW has taken the step of inviting its dealer network to become Appointed Representatives, and many have taken up this offer. By doing so, BMW is responsible for their compliance and has to ensure these dealers remain so on an ongoing basis.

“The regulations should provide an ordered marketplace, which provides a level playing field for all dealers. It should also ensure that all customers are aware of the suitability of products offered to their individual needs,” says Bob Jordan, general manager of sales and marketing at BMW Financial Services.

“It is hoped that the FSA has in place a firm enough regime to ensure that the level of compliance remains constant throughout the motor trade, and that it appreciates that the regulations cover a secondary activity of the business,” Jordan adds.

#AM_ART_SPLIT# RMI overview

“The implementation of the regulations in January was very variable across the industry but it wasn’t necessarily a tidy process. Many dealers have just got to grips with the regulations,” says Louise Wallis, head of business development at the Retail Motor Industry Federation (RMI).

“There are, however, a lot of dealers who are far from compliant and are struggling. In fact, I have had a number of dealers recently asking to become deregistered from the FSA because they are finding it too restrictive.

“Unfortunately, as they have signed up to be complaint, they are stuck with them until at least next January. The only option is for them to not sell insurance products.

“In terms of ongoing compliancy, some are aware, particularly the larger and more forward thinking groups. But many believe it’s just a case of a bit of training and filling forms.”

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