Dealers who want to lead the consumer-focused cultural change the Financial Conduct Authority (FCA) era is hailing in F&I product sales will need to consider employing a compliance manager, F&I expert Adrian Foster predicted.
As director of Adroit Automotive, which provides business manager recruitment and interim contracts as well as F&I training to the automotive retail sector, Foster is already working on evolving the traditional business manager’s role and place in the showroom.
When he speaks at AM’s F&I Compliance Conference at Oxford’s Belfry on 18th November he will outline his vision of an evolved business manager’s role which includes an on-going audit of every deal file the dealership produces as well as overseeing the sales processes and compliance procedures throughout the business.
He said: “Merely changing the title of the business manager to say that of customer care manager or compliance manager simply won’t cut it given the conversations we have been having with the FCA.
"Today’s business manager is very sales focused and often takes responsibility for stacking the deal and second facing, yet a compliance role requires very different skills including a methodical approach, an eye for detail and an ability to grasp the nuances of every customer’s individual perspective.
“Many of the big dealer groups already employ a deal file auditor whose job it is to ensure dealerships comply with the FCA and I think we will see the finance companies employing their own auditors who will visit dealerships and check everything is in order relating to their finance contracts.
"However, I think dealers who are really serious about thriving under the FCA regulations will need to employ their own person on site.
“Originally, when business managers were first introduced into the showroom, the tendency was to recruit from outside the industry.
"As the role gradually evolved in the years that followed, business managers have become interchangeable with sales controllers and so have been generally recruited from within the sales force.
"However, it is highly likely we will see automotive retailers once again seeking external applicants for these compliance roles with former independent financial advisors (IFA) being the likely candidates.
"Many IFAs will be looking for an alternative following the strict governance in the pensions and mortgage market but will be able to put their customer service skills and understanding of applying rigorous financial guidelines to extremely good use in our industry.”
Foster will explore the host of issues facing business managers and the wider sales team of incorporating compliance within their current job roles as well as looking at some of the alternatives and applying lessons from other sectors such as banking where many High Street banks already employ compliance officers.
Tickets are available to dealers and manufacturers, to book, please contact Emma-Louise Kinnaird on 01733 468325 or email email@example.com or visit www.amfandicompliance.co.uk.
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max - 23/10/2014 14:54
Who has ever come across a dealer who isn’t in need of professional FCA compliance advice, and in-house resource! Then try searching the job vacancies in AM our other locations and find jobs where FCA/regulated activities even get a mention, and you have your answer. Some dealers still seem to think they 'just sell cars', and that makes then bullet proof when it comes to FCA regulated activity. With CONC too, much will have to changes in dealer world, and not before time.
Rich miller - 23/10/2014 15:14
If dealers do not consider technician accreditation as important (see earlier post by AM) I cant see this being a priority.
max - 23/10/2014 15:30
@Rich miller - A fair point, but with unlimited fines, the ability to stop regulated activities, and personal sanctions on Approved Persons, one might hope that it would attract the appropriate resources. Not just for the dealer, but to actually deliver on TCF.
Luckypill - 23/10/2014 15:37
@max - Do you not like car dealers very much Max?
max - 23/10/2014 19:48
@Luckypill - it's my industry, and I think its rather important that they do the detail and engage with the FCA rules. Which bit of TCF, isn't just good bussiness sense, regulations or not?
Luckypill - 24/10/2014 10:01
@max - Interesting.... so as a fan of TCF, which in principal is no bad thing, how far do you go with your customer? For example, if you can offer your customer a finance rate of 7.9% APR on their loan but you know Santander offer 4.9% do you tell them Max? If not....are you really treating them fairly or are you just being hypocritical?
max - 24/10/2014 11:15
@Luckypill - With increasing transparency, commission disclosure, and the changes to dealer&execs incentives schemes, do you think that the higher rate would be the right decision? Which offer would you advise your mum to take? The word advise is key here, because that’s what execs are in effect doing under the rules. A customers comes in for a big family car with ability to tow a caravan – seems a no brainer not to sell him a 2seater sports car, so why is so hard to put him in the right F&I products for his circumstances, not just the dealers margin? Customers will become wiser, not only of the offers available, but how they are made up. Nobody inc the FCA is saying the dealer can’t make a profit, but read the papers so far on add-ons for instance, value is an ever increasing issue for the regulator, under their customer protection and completion remits. Dealers have to change, and fast. Maybe a poor public perception of motor dealers is in fact deserved, and those who truly change and embrace TCF will be the winners. That’s the way I think it should be, but time will tell.
Luckypill - 24/10/2014 11:31
@max - Not saying I disagree Max but you seem to have not answered the question,,you've just posed another? You sound like a politician or worse a "Consultant". If a customer came to your garage and you can offer a loan at 7.9% APR but you know Santander can do the same loan at 4.9% do you tell them? If not, are you treating them fairly? I agree it's time to change I'm just interested in what you think as someone who seems to have a very strong opinion on the trade and TCF.
max - 24/10/2014 12:08
@Luckypill - If the rest of the deal is all things equal, which requires a thorough understanding of customer and product and available options. Including the T&Cs and how the lender performs, for instance in forbearance etc, then 4.9 % . And your answer? What advice does Mum get from you? I think everyone will find, assuming they work in a regulated firm, that they too, are expected by the FCA to have a very 'strong' opinion on TCF. Moreover to be able to demonstrate it.
Luckypill - 24/10/2014 12:32
@max - Wow, that's one heck of an answer to a very simple question, so if my mum comes and buys a car from you this weekend you will quite happily inform of cheaper products on the market than you can provide??? My advice to her will be go and see Max! But I struggle to believe that this will be the case, I don't really think you would sit there and advise people of your products and then say "But hey, have you tried your bank, I think they may be cheaper? or this GAP is great, but you can get it cheaper on the internet? That makes no sense! I don't think the FCA really expect you to actively move customers to other products that may be cheaper than yours in order to treat them fairly.... Even financial services don't do that!
max - 24/10/2014 13:09
@Luckypill - No she would get the option of best product for her, from the firm. I read your original post which raised this, in that the firm had both the 7.9 and 4.9 available inside the one firm, not the open market. (In that Santander are a motor provider as well as high street provider). If that was incorrect then we are at cross purposes. I think you fail to understand the details of the handbook. The firms disclosure, clearly lays out what products are available at the firm and the basis on which they are sold. There is no requirement to tell the customer that other products, at other retailers, at other prices exist. A common ‘urban myth’. The requirement is that the firms dealings with the cust will be fair, both in the selection of products available, and how they are sold. You mention ‘even financial services’ like it’s a different world, both CONC, ICOBs, SYSC etc apply to what you class as ‘financial services’ every bit as much as they do a regulated dealership. Hence my thoughts that a change of culture is needed in many motor dealers – we don’t just sell cars! So may we assume your advice to mum would be don’t touch dealer finance?
Luckypill - 24/10/2014 13:26
@max - Quite the opposite Max, with the offers available from most finance houses now and the benefits of a tri-party agreement I would always advise to take the dealer finance, But we are not really at cross purposes.... I read it as you are saying if you have different schemes with your finance houses you should always give the customer the cheapest one you have? If not, have you treated them fairly? because by that logic, fairly basically means if you could have made anything cheaper you should have made it cheaper, that would surely be the best customer outcome!
max - 24/10/2014 14:04
@Luckypill - ‘Cheapest’ is not necessary fair / or in your words ‘best’, nor in the words of the FCA ‘satisfied does not equal fairly treated’. The ‘logic’ you quote is flawed - The lowest % rate does not necessarily equal the fairest option for the customer. Where, for instance, do you place suitability in insurance sales, assuming that the sale is on an advised basis? Some aspects of dealer life are regulated by the FCA are and some are not. You seem to believe the industry can pick and choose when and which bits of the regs may apply, when and to whom. You comments are full of…. I agree BUT… which is the whole point, you can’t believe in a principle partially. Take the principle requirement to act with integrity, there are no degrees of such, one is either a firm/person with integrity or not. In your scenario, how does a dealer explain itself under principles 8&9? Principle - A fundamental truth or proposition that serves as the foundation for a system of belief or behavior or for a chain of reasoning:
max - 24/10/2014 14:56
We digress.. the title is - Do dealers need to employ a F&I compliance manager? I argue that they do, and more so have a responsible expert at board level. If they don’t have either then hire quality outside assistance, until they do. For those firms ‘summoned’ by the FCA as part of the BRAW process, they cannot take their consultant along to the interview. That should ring alarm bells for those who overly rely on outside help. Do you think that dealers need F&I compliance managers?
Luckypill - 24/10/2014 15:14
@max - I agree with the principle, just not your interpretation of it! May I ask what it is you do in the Motor Trade? As regards my scenario? I wouldn't put myself in it in the first place, that is why I was interested in what you would do as personally I don't believe you can have different finance packages in place with different lenders and still provide the customer with a fair outcome. One set of rates and terms identical with each company and sell off a set commission so whatever product the customer takes, as a dealer you earn exactly the same. Surely only then can advice be truly based on TCF.
Luckypill - 24/10/2014 15:29
@max - I think it is possible without compliance managers assuming there is a decent process in place. Compliance managers might be a bit over the top for smaller dealers and also for the customer experience, although as dealers we know we don't just sell cars, that is what the customer has come to us for.