The Financial Conduct Authority (FCA) appears to be accommodating market changes in a flexible yet robust way, said Jonathan Rogers, a partner in law firm Taylor Wessing.
Just as automotive retail is being transformed by a multi-channel sales environment, so is consumer finance.
Rogers (pictured), who will speak in the F&I Theatre at the new Automotive Management Live event which takes place on November 16 at Arena MK, said: “Customer behaviour is driving change throughout the automotive sector, including touch points such as finance and insurance.
“Innovation is causing a sales and services process evolution and as technologies advance, cars and related financial services packages alike, are becoming increasingly sophisticated.
“Emerging multi-channel sales formats need to be underpinned with finance and insurance packages that facilitate this.
As with financial services, automotive will see differentiation and specialisation at key points along the customer journey.
The automotive sector can use this to steer financial services providers, like banks, lenders, insurance providers and brokers to formulate consumer lending and insurance in an agile way.
“As the financial services sector is itself being challenged head on, industry-led innovation has been met by progressive thinking from its regulatory bodies, such as the FCA.”
This means, Rogers warns, that against a background of headline grabbing sanctions, such as payday firm CFO Lending being ordered to provide £34 million in redress to some 97,000 customers, it is a good time for dealers to check their approach to compliance.
He said: “A core tenet of the FCA's position is that businesses need to comply with regulation on an ongoing basis – not just at the time of authorisation.
“This does involve regularly reflecting on your approach to compliance. It is certainly easier to tweak aspects of your business to fit the latest requirements than with the regulator looking over your shoulder.”
Drawing on Taylor Wessing's experience from the financial services sector, Rogers will touch on considerations when promoting finance products, developing a solid understanding of credit risk, devising appropriate arrears handling processes, running competency and training programmes, dealing with regulator supervision and investigations.
“The automotive sector and consumer financial services can work together to present retail formats that work for customers and take unnecessary risk out of the system.
"For the next few years, we don't expect any significant shake up to the central premise of regulation in this area but we do still expect rules, and the regulator's interpretation of them, to develop with time.
"Additionally, the regulator will continue to adapt and develop its approach to supervision, embracing innovation and technology. Businesses that navigate both technology and regulation are likely, longer term, to successfully deliver to all stakeholders, including the FCA, and provide positive customer experiences for finance and insurance users.”
Free for dealers and manufacturers, the one-day expo is unique in the industry gathering a host of suppliers as part of a large exhibition and providing best practice masterclasses whilst a number of F&I speakers take to the stage exploring the current landscape.