From January 1 BMW Group Financial Services is changing the way its UK BMW and Mini dealers are incentivised and rewarded to avoid potential FCA concerns about upselling.
Spencer Halil, group brands general manager at BMW Group FS, said: “We’re bringing add-on fees down to virtually nothing and introducing a performance bonus for retailers based on delivering excellent customer outcomes.”
Halil said a new package for dealers was based on a discounting structure rather than upselling. The primary objective was to provide customers with simple, transparent, fair products that met their needs, “an approach also in line with the aims of the Financial Conduct Authority.”
The new model follows an 18-month research and investment project and will affect all 147 BMW dealers and 143 Mini dealers.
BMW Group Financial Services said it is a new customer-centric business model that will see changes made to the way in which retailers are incentivised and rewarded, as well as updating the terms for the brand’s finance products.
Halil said: “We’ve done this because it is the right business decision, but it can’t go unnoticed that this approach is also in line with the aims of the Financial Conduct Authority as well.
"While we recognise the dealer network may experience some short-term adjustments through the transition, we fully believe that this approach will deliver genuine business growth through 2015 and beyond.”
“The world of retail is constantly evolving, with customers having better access to information, be it online or through peer channels, before they even enter a BMW or Mini centre.
“As a result, it is important that we tailor our business to suit our customers’ needs so that our retailer network can continue to deliver a fair and transparent service, while focusing on long-term loyalty and retention.
“This is why we’re implementing a common finance package across our whole network, bringing add-on fees down to virtually nothing and introducing a performance bonus for retailers based on delivering excellent customer outcomes.”
Some retailers have already moved onto the new system, however the full network transition has been announced to take place on January 1 2015.
From this point, customers will benefit from a capped rate of 10.9% and virtually no fees.
The BMW Group retailer network will enjoy a common package which BMW Group Financial Services said creates a level playing field, a discounting structure rather than up-selling, removal of fees and the introduction of a performance bonus based on delivering the best customer results.