New era for FCA brings benefits

Andy Gruber, director, Alphera Financial Services

What does the FCA stand for and why is it so important to comply? To put it simply, the FCA is the consumers’ voice and it is about putting them at the forefront of what we do, Andy Gruber explained.

The FCA is principle-based and culture-focused – dealers need to take this seriously, said Gruber. Transparency is paramount and if you can’t evidence that something has happened, then it “never happened”. The FCA will ask you to show it there was fair transparency in a deal.

There is a lot of room for interpretation: the FCA has given its key principles, but hasn’t said exactly how to do things, so each dealer and finance company could interpret and implement each differently.

“You must appear to be lenders – and not just after a sale. A fair and transparent work ethic across the industry will deliver financial products in an easy way. Customer satisfaction will go up, customer retention will go up and, most importantly, customer trust levels will increase too – all down to transparency and having confidence in the sales process that they go through when buying a car,” Gruber said.

“The implementation of FCA guidelines could mean – and I’m not saying that this is the all-solving solution, this is just to spark thought – if you were to go down the fixed interest rate, it would give the same rate to the customer. You could think about having the same commission for each deal. You could get rid of fees. You could pay the same commission for all products. You could pay the same commission for all terms. All these ideas would be very easy to implement and easy for sales people to understand, making it easier for them to confidently sell finance.“

In Gruber’s tried-and-tested example, penetration rate went up from 40% to 52% – sales people felt empowered to talk about finance and felt comfortable. However, there is a real danger that income per retail unit will go down. However, the bottom line went up by 11%, with more units being sold.

Initially, it will be difficult to get the lenders talking on the same page but, overall, compliance has big benefits for the industry, he said.

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