The evolving role of the business manager
Adrian Foster, managing director, Adroit Automotive
The car dealer’s interest in finance and insurance has to change from being all about making money to being about attracting and retaining customers, according to Adrian Foster. Foster believes the FCA will question whether it is fair to the customer if dealers charge a big mark-up on the base rate and earn commission linked to the sale.
Foster outlined to delegates the Retail Distribution Review (RDR) put in by the FCA in 2013 in the life and pensions sector. The aim of the RDR was to remove commission bias in financial advice. Foster believes the FCA will similarly look for inducements from product providers and commission bias in the motor retail sector. “Our interests aren’t aligned with our customers’. If I’m selling a product and I only earn when you buy it, we have a fundamental difference there, and that’s what the FCA is getting at,” he said.
Foster believes rate spread, profit per unit and add-on profit per unit will not be compatible with the FCA’s principles. “Measuring our success in the showroom by the amount of profit we’re able to charge our customers is not the way the FCA wants us to think.”
He referred to a recent FCA fine of former Swinton Insurance directors for putting in a culture of high sales and increased profit without regard for the impact on its customers. He said a cultural change is necessary, with dealers and their employees being paid on customer satisfaction, not on sales. A broader range of products should also be offered. “Happy customers are repeat customers. If we provide a business manager who’s ensuring there’s a positive culture, ensuring the customer has a positive experience, ensuring all these products are explained carefully with the pros and the cons, the customer benefits from a much better experience.”
Foster suggested fixed retail rates will come, leading to lower prices, but sales penetration should increase.
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