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Blackhorse comment: Regulations give protection to both seller and buyer

In August Datamonitor published a report that showed a contraction in the Payment Protection Insurance (PPI) market and decline in penetration rates.

There’s no doubt that the increase in regulation coupled with the negative media attention has resulted in new challenges when selling finance and PPI. The good news is that dealers already have the tools in place to make compliant sales.

As part of the application process the customers capacity to afford the borrowing is checked, and a full demands and needs questionnaire is completed prior to making any PPI recommendations.

As the FSA continues to assess the quality of dealers PPI sales, indications are that many dealers still need to pay attention to:

  • Compliant status/initial disclosure documents
  • Statement of price – its timing and total cost.
  • Explanation of any exclusions.
  • Statement of Demands and Needs – the amount of information being obtained, and at what point, to ensure advice is suitable.

    Dealers should not be discouraged by these regulations – they are in place to protect both the consumer and the sales person. Dealers have a responsibility to offer the option of finance and PPI when purchasing their car. Benefits, include:

  • Complete service to the customer – PPI offers customers comprehensive cover to protect their payments, which then offers peace of mind.
  • A positive claims experience helps to increase customer loyalty.
  • Comprehensive range of cover – PPI offers more options for cover than many products generally offered by other lenders.

    And, remember that there is also a direct benefit to the dealer when making compliant finance sales as there is the opportunity to earn commission on each agreement.

    All agreements with PPI are eligible for commission, which means that the dealership has the opportunity for enhanced earnings.

    For further information go to the FSA and FLA websites at and

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