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Deciphering the Financial Conduct Authority’s regulations

iVendi CEO James Tew will provide a first reaction to the pending Financial Conduct Authority’s regulations just days after their publication at the AM Used Car Market Conference on October 10.

The FCA regulations are due at the end of September and lenders and other stakeholders, including dealers who rely on finance as a business driver, are anticipating the FCA recommendations.

Tew believes clarity will be hard to come by and precedents could well be established in the courts.

He said: “I am expecting to wade through documentation a doorstep thick but I don’t think absolute clarification will be forthcoming and in an industry which is process-driven, it will make interpretation and implementation very difficult.

"In fact, I would not be surprised if precedents are set as a result of action by the FCA which means dealers won’t realise their non-compliance until they find themselves on the wrong side of the new organisation.”

If there’s one certainty dealers can expect, it’s that the FCA means business as recent cases have already indicated.

For example, Swinton Group Limited, one of the largest insurance retailers on the high street, was fined £7,380,400 for mis-selling. The FCA found the group had sacrificed the interests of the consumer in favour of profits when it came to selling their add-on insurance policies.

The FCA takes full responsibility for regulating consumer credit activities on 1st April 2014 and dealers are being urged to check their current Office of Fair Trading credentials are up-to-date to make the transition as straightforward as possible.

At the AM Used Car Conference, which takes place at the Ricoh Arena in Coventry, Tew will provide delegates with a first reaction and address some of the areas which are likely to concern dealers the most.

He added: “Dealers rely on finance as a revenue stream so unlike GAP, for instance, it may not be a question of simply opting out of selling finance altogether.”

Tew will also raise the question of online compliance. As a financial quotation software provider for automotive retailers, iVendi is watching this area closely. The regulations will include online but their interpretation by the FCA is not yet known, for example, a dealer’s website providing an online quote for a used car but not highlighting other funding options could be interpreted as non-compliance.

Tew said: “All dealers will undoubtedly utilise a ‘tick box’ process but if a mis-sold claim is made, I am confident the FCA would not view this as good enough.

It underlines the importance of establishing exact requirements for compliance both on and off-line incorporating the entire sales process which shows a clear trail of times and events.

Dealers will also need to be aware of claims management companies who may well target automotive consumers making the audit trail imperative to protect themselves in the event of any claims.”

Tew will explore the FCA publication against a backdrop of an increasing consumer appetite for online finance quotations and even payments, itself taking place in a recovering market which is likely to attract external and competitive lenders back into the sector.

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  • gezza37 - 28/09/2013 11:18

    Sounds like it will be a nightmare, just like the FSA has been!

  • max - 30/09/2013 16:30

    It's not as hard as some would make out. Do the detail, not just skim it. Put in place proper electronic systems which are more than tick box. Hundreds of bits of paper, poorly completed and inadequately audited, are no solution. Senior managment must understand and use the MI!! Yes the FCA mean business, and Yes they will catch some out, but if the cap fits etc. The industry needs firms who take their compliance seriously, not those who fail to understand, fail to act, and ultiamtely fail their customers. Heads out of the sand time! If you want Gap etc to survive wake up and do the right thing by your customers, and the regualtor. If you struggle with insurance compliance watch out for when the FCA take on CCA from the OFT.......