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FCA 'may limit point-of-sale finance if GAP moves succeed'

By Tony Willard

The Financial Conduct Authority (FCA) may seek to remove the point-of-sale advantage from used car motor finance if similar moves with GAP insurance are successful, said James Tew, director at iVendi. (pictured)

“The arguments made against the sale of GAP as an add-on dealer product could potentially be equally applied to motor finance,” he said.

“We would be surprised if this happened, but there are definite parallels between criticisms made of GAP and the way in which used car motor finance is sold.”

Tew said it was difficult to argue the same criticism did not apply to used car motor finance, but any moves to restrict the way finance was sold would have a much greater impact on dealer profitability than GAP.”

He thought the industry may want to look at ways of increasing competition at the point of sale or providing other ways of ensuring that customers demonstrably received a good deal on finance.

“This is an area where we could pre-empt any FCA moves by ensuring that we put our own houses in order,” said Tew. “This could be done in any number of ways – from providing an extended cooling off period or ensuring regular checks to demonstrate competitive motor finance is offered to customers.”

Tew said iVendi was starting to see signs of dealers taking notice of the spirit of what the FCA was proposing in the used car sector, with lower interest rates.

Ciaron Whelan, The Warranty Group divisional director, said little in the FCA proposals should impact on dealer sales of GAP other than customers’ post-purchase confirmation, which the firm opposes.

“Most dealers we work with have a market-competitive GAP proposition with high levels of consumer protection,” he said.

“Many offer a 30-day cooling off period for customers.”

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  • David - 11/09/2014 13:21

    Farcical! All a cooling off period for finance will do is delay the customer picking up their car

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    • max - 12/09/2014 13:58

      @David - the right exists already for many types of finance - its under the right to withdraw - something that dealers should already be making clear to all there customers. More 'evidence' that the FCA will take issue with dealers v soon.

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    • David - 12/09/2014 14:29

      @max - As someone who has worked in the finance industry for 20 yrs + , I am aware of the cooling off and withdrawal periods that currently exist. My point is this sounds more like the customer will have 7 / 14 days to decide whether he wants the car and / or the finance. If I were a dealer in New Cars, no-one would be leaving my forecourt with a brand new car until that period has expired - madness to let them in fact. Is this what the FCA wants? Is this where you see more regulation is needed? Someone who has decided to purchase a car and some finance to pay for it hasn't made that decision since leaving the house on a Sunday Afternoon, like going to Tesco. Can they really not make such a decision without a cooling off period?

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    • max - 17/09/2014 15:27

      @David - The contract to purchase the vehicle, and the finance are two distinctly different contracts. A customer may withdraw from the finance under the right to withdraw, but will still have to pay for the car by another means. When you read and understand the CONC rules, you may understand why the world has to change. Your 'this sounds like xxxx' is half the problem, dealers should do the detail, not the 'I've been in indusrty xx years' view of the rules. And no, according to to regualtions, they can't make those decisdons without the right to withdraw, like it or not, though your sentiments have the majority of our support, I expect!

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