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Dealers expected to gain more detailed info on customer ability to afford finance

Dealers will be expected to go into more depth with customers to make sure they are able to afford finance under proposed changes from the Financial Conduct Authority (FCA).

James Tew, iVendi chief executive, believes dealers could risk damaging long term relationships with customers if they do not handle the process in a sensitive manner.

Meeting the FCA’s requirements in this area is likely to involve asking for much more detailed information about a customer’s personal finances than existing motor finance applications.

Difficult areas covered are likely to include information about income and any possible future personal changes in circumstance – leading to potential discomfort on the part of customers unused to being asked these questions in a dealership.

Tew said: “This type of detailed financial questioning is really a new area for dealers.

“It is unlikely that your motor finance provider has been using an application process that employs anything other than fairly blunt criteria designed to assess whether a potential customer can actually afford the car that they want. Filling in the average application form has generally taken a matter of minutes.

“Under the proposed new FCA regulations, the process will be more sophisticated and designed to assess whether the customer can sensibly afford the payments on the vehicle and finance product that they want. This means building up a more complete picture of their finances and taking sales or F&I staff into areas that are probably new to them in terms of knowing how to deal with customer appropriately.”

Tew said dealers would need to treat the process with more gravity than has been usual and could mean customers will need a private area to discuss financial matters.

Tew said: “It is a question of finding a tone that makes the customer comfortable about passing over detailed personal information.

“Getting this right could be a key factor in ensuring that you do not damage long term relationships with customers and dealers and motor finance providers may want to look at whether training and detailed guidance is needed.”

Regulation of the consumer credit industry passed to the Financial Conduct Authority from the Office of Fair Trading (OFT) on April 1.

Read AM's special report on the financial regulator and how it will affect car dealers and automotive finance providers. In addition, the report contains a feature on the FCA's proposed changes to how GAP insurance and other add-on products are sold.

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  • max - 28/05/2014 09:49

    and just how are they going to record, retain, and audit this information?

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