Dealers need to make sure they are comfortable with the new Financial Conduct Authority (FCA) regulatory framework and should start consulting with their finance providers if they haven’t done so already, according to Alphera.
Dealers must register for interim permissions from the FCA in order to legally continue with their consumer credit related activities from April 1, 2014. The FCA recently published its 193-page document, detailing proposals for its regime for consumer credit.
After April 1, 2014 dealers will need to complete a more detailed application process for authorisation by the FCA.
The FCA’s aim is to use a proportionate approach to authorisation depending on size and type of company and activity conducted.
Authorisation is the FCA equivalent of the OFT’s licensing system. There will be a phased approach to authorisation, where they will ask different types of firms to apply by different deadlines.
If dealers do not register by March 31, 2014 they will no longer be able to legally continue with consumer credit related activities.
Samantha Cripps, sales development manager at Alphera Financial Services, said: “The continued growth in the motor finance sector is positive news for franchised and independent motor retailers alike. However, it is important that we continue to focus, as an industry, on the principles of affordable and sustainable lending.
“This means ensuring that sales people in dealerships are appropriately trained and knowledgeable of the wide variety of finance packages which are available, in order that they may advise their customers on the option which is most relevant to their circumstances. For example, a flexible PCP deal can be more appropriate than a HP arrangement, dependent on circumstances.”
Cripps said it was important that dealers look at all the processes involved in motor finance sales, not just the interest rates, but the complete and whole life cost to a consumer.
She said: “There is a huge opportunity for sales people in car dealerships to be able to add real value to the car buying process, ultimately generating trust and repeat business from the consumer.
“However, to avoid missing out on these opportunities to write increased business, it is important that dealerships get on board with the new FCA regulatory framework sooner rather than later and obtain interim licences. The industry is likely to change as of April 1, 2014, but there are steps which need to be taken around obtaining interim licences and training of staff in the meantime. If dealers do not have the legal and financial knowledge to prepare for changes in-house, it is vital that they start to consult with their providers as soon as possible.”
- AM will be publishing its analysis of the FCA regulations in the October 25 print issue. The AM Hit For Six Conference on November 19 in Wakefield will also feature a session from the FCA’s Sam Stoakes to provide additional insight and guidance for motor industry personnel who need to take action over the coming months.