The impending legislation regarding consumer credit agreements and GAP products should be welcomed in the motor retail sector as an opportunity to demonstrate a ‘customer first’ approach to business.
Andy Gruber (pictured), director of Alphera Financial Services, told a Frontline Solutions F&I Conference today that F&I providers did not have the best reputation, tarred with the collective negative opinion surrounding the banking sector.
But the focus being placed on the sector by the Financial Conduct Authority now is a “real opportunity to address this and do what should have been done a long time ago to put the customer at the centre of what we do”, he said.
“There will be more system and documentation requirements and questions asked about current processes fitting principal-based regulation, but overall this will be a good thing for the industry.”
In the context of a new car market growing in 2013 10.8%, with the leading brands seeing growth in volumes of between 16% and 30%, fuelled by manufacturers offering significant financial incentives – PCPs in particular - the F&I market place was now “hyper-competitive”.
“The assumption is that when the economy improves the atmosphere of hyper-competition will go away.
"But a large proportion of UK consumers have become deal seekers rather than being allied to any one brand or a dealership. They will assess one deal after another, and if you are not able to match or better it they will move on. And it’s very difficult to wean the market off PCPs now. Hyper-competition is here to stay.”
Gruber also highlighted two foreign markets where regulatory influence had impacted on trading freedoms.
In Australia dealer groups are forbidden from having more than finance partner be it captive, first string, second string etc. And in the Netherlands, regulators set a maximum commission of 0.002% of a dealer’s lender portfolio.“
Embracing the changes ahead will allow us to stay in control of our own destiny,” Gruber said. “The right lenders are those that embrace the legislation.”
The FCA is currently investigating the general insurance and consumer credit market with a view to improving practises for the consumer in the motor retail sector.
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