Motor dealers are waiting until the last minute to apply to the Financial Conduct Authority (FCA) for interim permission to continue providing motor finance, according to finance technology iVendi.
Dealers have six weeks until the April 1 deadline to apply to continue offering finance in their dealerships.
James Tew, iVendi managing director, said: “We work with more than 1,000 new and used car and van dealers, and the number that have moved to apply to the FCA appears to be surprisingly low.
“The reasons for this are varied – from apathy and a general lack of awareness through to wanting to gather as much information as possible about the new regime before making a decision.
“Dealers who miss the boat on April 1 will face a long wait before obtaining full authorisation and will not be able to sell finance. The sensible action is to apply for interim permission now. This will only cost a few hundred pounds and will buy you time to find out more about the whole issue and the processes involved.
“Once interim permission has been obtained, it will allow you to work through the various compliance options.”
The FCA told AM in January that one in two dealers in the UK had been in contact to apply for interim permission.
Tew said dealers need to ask themselves what the impact of not being able to sell motor finance will have on their businesses.
He said: “The fundamental question is simple – how many customers will you lose by not being able to finance the car that they want to buy?”
iVendi believes there are four points dealers need to consider:
• What do we currently earn from finance? Will forgoing finance opportunities significantly affect our profitability?
• Will not offering finance significantly affect our ability to sell cars? Will not having a monthly payment option put off customers?
• Will not being FCA regulated negatively affect how we are perceived, especially by existing and potential customers?
• What will be the cost of creating and following compliant processes?
Tew said: “For many motor dealers, we suspect that the answers to the first three of these questions are positive, with the decision being based on the answer to the fourth.
“Unfortunately, the overall cost is not yet easy to work out.”