Nearly half of drivers believe they have been over-charged and mis-sold finance and insurance products when buying from a dealership.
Research from the Institute of the Motor Industry (IMI), the professional body for the automotive sector, has found that finance and insurance products are added to 60% of all car purchases.
But 45% of 2,000 drivers said they felt pressured by a salesman to buy add-ons when they most recently bought a car from a dealership or garage.
The Financial Conduct Authority (FCA) has implemented changes to the Consumer Credit Act which aims to stop drivers being mis-sold finance and insurance products.
Yet 42% of car buyers said they had avoided a dealership due to the lack of trust.
According to the IMI research this mis-trust could be avoided, with 64% saying buying a car would be easier if the people they were buying from were members of a regulated body.
Over half said they would feel more comfortable making financial decisions relating to a car purchase if additional measures were in place to ensure they weren’t overcharged
Steve Nash, IMI chief executive, said: “Our research highlights that nearly two thirds (63%) of car buyers find the process stressful, therefore it’s our role to restore consumer confidence by improving the car buying experience.
“This research however does underline why it’s the right time for the retail motor industry to take more responsibility to ensure anybody selling finance and insurance products has the correct training to be able to help drivers decide whether or not they would like to buy these extras when purchasing a vehicle.
“The IMI F&I Accreditation helps safeguard customers by ensuring the salesman is giving accurate and truthful information. It also gives the car salesman the knowledge to be able to identify which products, if any, are suitable for that individual customer. This training is just one step further in ensuring the industry is providing a good quality and honest service.”
Sabina Hegarty, Calibre Group Solutions managing director, said: “It’s clear from the research that perception of our industry continues to be a barrier for customers. The only way to change this is to 'improve from within' by developing and upskilling our people to ensure the advice they give is fair, transparent, consistent and in the best interest of the customer.
“Savvy shoppers of today are looking for more than just a good price.
"F&I specialists on site need to actively improve their approach, leading to better customer satisfaction and ultimately resulting in greater consumer confidence. It certainly won't happen by itself.”
IMI research highlights:
- 60% bought F&I products or services when buying a car
- 45% felt pressured to buy add ons/additional extras
- 33% felt they had been over-charged when purchasing a car and/or insurance
- 53% said they would feel more comfortable if measures were in place to not be over charged
- 76% felt they couldn’t trust a car salesman
- A car salesman is the third most untrusted profession
- 37% were more likely to take out F&I products/services if the dealership was accredited by an industry body
- 64% felt buying a car was a stressful process
- 64% buying a car would be an easier process if drivers were buying from were a regulatory body
- 42% avoided a car dealership due to lack of trust
Jeremy has been a journalist for 30 years, 20 of which have been in business-to-business automotive. He was a writer and news editor on AM-sister brand Fleet News for three years before setting up the AM website. For the last five years he has been Bauer B2B’s head of digital helping to manage the digital assets of AM, together with Fleet News, Commercial Fleet, Rail and Smart Transport.
vbrand - 16/03/2017 11:45
FCA Regulation is Building Consumer Trust The IMI research outlined here highlights the continuing challenge facing dealers of building trust with consumers. The data indicates that car sales can benefit from the type of regulatory endorsement that sees F&I services as significantly more trustworthy. The research proved fascinating reading apparently suggesting 64% of car buyers would be happier buying their car from a regulated source. This compared with a far lower 37% of F&I buyers who would value the endorsement of an industry body. This more modest number is probably a reflection of the reassurance provided to consumers from FCA regulation and the required controls that are in place to protect consumers. The data published suggests that 60% of those researched purchased F&I services and that 45% reported feeling pressurised into buying add-on products. It is a concerning number and may reflect the wider distrust through the car buying process. Although we do not want to make light of the issue highlighted by the IMI research, if the position was as universally severe as it indicates, we would be very aware of it and the issues of reputational risk that would be associated with it. Simply put it is not a situation we recognise at all. Perhaps our processes and controls are more rigorous because we operate our own standalone compliance business, i-Comply online, which maintains close oversight of our business approach and that of many or our NFDA and dealer clients with whom the business is retained. Also the time we invest in training sales personnel on product specifications, features and benefits and promoting them is an open and transparent part of the AutoProtect approach. Our training and review process is supported by rigorous audited monitoring, again at sales person level, to ensure a compliant approach. This level of scrutiny is arguably higher for car sales and sadly can sometimes appear intrusive because of the detail required. As well as our point of sale support, post purchase, we scrutinise all cancellation activity alongside complaints as part of our learning culture. These remain very low; any suggestion of mis-selling is immediately referred and reviewed with the dealer for appropriate action. Such incidences are very isolated. There can be no question that we have to continue working to drive up the quality of add-on products, buying experience and aftersales support. Training and monitoring are an ongoing topic for all dealers. After all, losing their FCA regulated status would represent a major body blow for any dealer. As a business, we and our i-Comply online colleagues are committed to ensuring quality through the showroom and post-sale and to protecting both the dealer and their customer. It is a role that we believe is enhancing the wider integrity and trustworthiness of the dealer.