SAF has increased showroom knowledge of finance products through an online training scheme, free to dealers and financed by FLA members. A growing proportion of relevant dealership staff can now advise car buyers confidently and objectively about which type of finance product would suit them best.
Three out of four retail purchasers of new cars use dealership finance, says the FLA. Almost 2,400 (25%) of UK showrooms are participating and 40 of the top 50 dealer groups have SAF recognition.
The FLA spokesman said: “SAF is contributing to customers’ overall experience because a thorough understanding of finance products is basically good business sense. Customers depend on dealers’ ability to point them to the most suitable types of agreements, and this in turn supports profitability. Satisfied customers return.”
Are customers satisfied with car dealers' finance advice?
Fair treatment of consumers is a priority for the FCA, so the ability of people being able to rely on a dealer’s advice is essential. In late 2013, the FLA commissioned independent research to check how well car buyers felt they were treated at dealerships.
The results were encouraging. Large majorities were “very or fairly satisfied” on three key measures: dealer service in relation to funding a car purchase (85%), a dealer’s ability to answer questions on available finance options (78%) and their explanation of customers’ obligations under a finance agreement (79%).
The FCA is extending its scrutiny of dealers’ activities beyond the complex choice of loans. It says car buyers are not getting a good deal from guaranteed asset protection insurance (GAP), an important source of retail F&I revenue. This is because most GAP contracts are sold alongside a car, as were the ill-fated PPI (payment protection insurance) contracts.
The FLA has been in talks with the FCA about this issue. The spokesman said: “Rather than banning GAP, the authority plans to prevent the completion of a sale at the time of the initial discussion. Customers would have to confirm at a later date whether or not they wanted it.” The regulator’s plans for GAP sales are currently out for industry consultation, with feedback required by March 13.
Motor finance providers are starting to assess likely future trends and especially the looming challenge to the dominance of dealer finance, something the FCA will welcome to improve competition.
Kirk Franks, head of national sales at Alphera Financial Services UK, said: “The re-emergence of direct lenders and the proliferation of online finance options will provide consumers with even greater choice.
“If dealers continue to monitor their financial product offering to ensure consumers get a fair deal, and their prices remain competitive, opportunities for F&I growth remain strong. The ability to present informed finance choices is likely to be seen favourably by the FCA.”