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Radical reform called for

Diane Williams, the Finance and Leasing Association’s (FLA) principal consultant on credit and data policy, is calling for a radical overhaul of the processes involved in registering and tracking motor finance agreements.

Her controversial proposals – including no longer using VINs within asset registration agencies’ (ARA) databases – are designed to reform a system, which she claims “has some of the same continuing deficiencies. that have not changed in 10 years, which is pretty dire”.

At the heart of her blueprint for revised industry-wide data supply and monitoring would be a centralised FLA database, capable of feeding all the agencies.

This would involve a refinement of data down to three main elements: VRM vehicle registration details, types of agreement and the lenders reference number relating to an agreement.

Out would go the VIN, agreement dates and terms, plus related descriptions as part of a process managed (not run) by the FLA on a not-for-profit basis. It would be done on the basis of lenders supplying their portfolio of loans daily to a central point.

Williams highlights two major inadequacies in the existing system. Roughly 40% of the VINs supplied to the agencies are incomplete or incorrect while 10% of finance agreements handled by HPI are listed as live or “past due” when they have actually ended.

The latter lack of accuracy creates untrue, costly, time-consuming dual interests, generating false alarms for retailers, insurers and consumers alike.

With an increasing number of asset registration agencies (including Carwatch TDS and VDS) the Williams argues that having access to two sources allows more competition and client checks but the downside involves data processing and auditing issues.

She says: “If a lender deals with multiple agencies then you can end up with four of five sets of reports handled by the same number of back office staff. That is quite a burden and lenders should not simply ignore these issues on the basis it is a relatively low cost back office function.”

This central information source would provide daily updates from the previous day’s business, avoiding incorrect or incomplete and mismatched VINs, while processing online amendments and deletions promptly. All ARAs would then receive the same data at the same time, a mutually beneficial, nominally more efficient and cost-effective system. Williams admits that drawbacks include major systems changes for ARAs and lenders alike plus the sheer volume of data needing to be processed.

She concedes: “Up to seven million live agreements are on HPI and Experian books alone which means 21 million pieces of data being handled daily.

“My plan is unlikely to generate a perfect answer but it provides food for thought. The onus should always be on the lender to make sure the vehicle and related finance agreements are correct.”

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