“The process demands documents such as regulatory business plans and that the dealer can actively demonstrate the customer is the central focus of its business activities and is treated fairly. In many instances, the dealer simply doesn’t know what information the FCA is asking for, or they cannot provide the information as they do not track it.”
Frontline Solutions is acting as a sounding board for all its clients, offering support via a ‘compliance hotline’, where they can get in touch and ask relevant questions or check their approach to a regulatory issue.
Hill said one problem for dealers was mixed messages from lenders over matters such as suitability of product recommendation, affordability and whether a customer could afford the monthly payments.
“This hasn’t helped the average dealer, which could end up more confused than before,” he said. “Some lenders are part of major banks and the pressures to comply with a wider approach is impacting negatively on many dealers.”
Hill expects few dealers to miss their landing slot date, adding: “I am sure quite a few will decide not to go ahead with their application to the FCA when they see the application form, especially if they don’t make much income from finance.”
Andy Gruber, director at Alphera Financial Services UK, is optimistic about the effect of FCA compliance. He said the focus on fair treatment of customers meant dealers and brokers would have to look at their business models and may need to adapt over the coming months.
“We can see that in many other countries, businesses have to comply with higher standards of regulation than the UK market,” he said.
“The work the FCA is doing within the industry is a great opportunity for dealers and brokers.
“If dealers and brokers succeed in truly putting the customer at the heart of their business, our international experience shows that the upside can be tremendous.”
Julian Rance, head of Paragon Car Finance, said dealers needed to include detailed supporting information about the business, its ownership, risks and policies with the application for full compliance.
“For many finance providers, this level of detail will represent a much higher level of disclosure than they’ve been used to previously,” he said. “It’s important to remember this is aimed at raising professionalism and demonstrating commitment to treating customers fairly.”