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Taking proactive action to finance

Major lenders, the car retailing sector and captive finance providers should unite to prepare the ground for a motor finance compliance system to complement the FSA’s insurance regime.

Advocating this proactive approach is Paul Jordan, Capital Bank Motor’s senior director responsible for business strategy, who claims that unless the sector takes the initiative, European or domestic finance legislation will be imposed within five years.

Jordan believes the creation of accredited finance specialists within dealerships will give the car-selling industry much-needed credibility and perceived integrity, while attracting “the quality of people who have not considered our business as a career path”.

He says: “The time has come to be compliant on finance as well as insurance. We must take pro-active action with the F-word. At present, virtually anyone can turn up at dealerships and sell finance products without any accreditation. What other finance market would deal with someone without that status or approval?”

His initial proposal involves financial institutions and representative bodies such as the SMMT, RMIF and FLA to creating standards and devising systems (AM January 27).

“There is no point going to the FSA without a consensus, a specific framework capable of generating a standard and holistic approach to benefit everyone. I have raised this internally within Capital Bank Motor and beyond. Heads are beginning to nod positively,” says Jordan.

Logic, he argues, dictates that the next area of EC legislation affecting the automotive retailing sector will be finance.

He proposes “preparing ourselves to work with the FSA, which applies European legislation. Let’s be proactive and create a professional plus by putting our own house in order, rather than be prescribed to from above.”

Jordan argues that those retailers who embraced the FSA’s insurance-selling regulations and processes continued to make money out of selling cover, while those who resisted, delayed, or went into denial, generally lost income.

His game plan involves establishing levels of competency and continuous staff development, albeit not at degree level. Because of the sector’s inherent staff turnover ‘churn’, the ‘transportable’ personal nature of the qualification would be all the more valuable.

Jordan explains: “Dealerships would meet standards on transparency and comparisons with other products, but individual competence would be the foundation for selling finance. It would raise our image higher than that of the insurgent direct lenders.”

#AM_ART_SPLIT# The launch of a ‘bundled’ product

Capital Bank Motor could launch a ‘bundled’ product within six months, covering finance, insurance and servicing, for a set monthly budget if it can bring a “good-sized manufacturer” and/or a major plc retail group on board.

Peter Cottle, CBM’s deputy managing director, says: “We are either brave about this initiative, which I believe is absolutely right for the market, and pioneer it, or park it up and walk away.”

Cottle, who reveals that approaches are underway with a manufacturer and “one or two plcs”, claims: “With the right partner and commitment it could be operational within six months. It could be branded with a dealership group or via a manufacturer. They are not mutually exclusive.”

Capital Bank’s executive admits that combating the ownership “mindset and myth” of UK car buyers is crucial for a transparent scheme which “avoids the ups and downs of servicing, and the horrors and headaches of private sales and residual values in a form of holistic personal lease”.

Initially planned for new cars, Cottle says it could apply to used and points to Ford championing the cause of PCPs with Options in the early Nineties.

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