Alphera has launched a new car finance incentive scheme which has been designed with the specific purpose of promoting FCA compliance among car retailers.
BMW Group’s independent motor finance division will reward partners who generate the highest levels of customer satisfaction, rather than the highest finance sales volumes as part of the scheme – taking the best dealer and broker performers on an educational trip to NADA 2020.
The new scheme runs from January to the end of September 2019 and will be heavily weighted towards consumer satisfaction, with Alphera’s UK partners asking customers to complete a survey after taking out a finance agreement in order to gauge their satisfaction with the sales process.
Alphera said that encouraging “positive customer outcomes” will encourage “sales behaviours that comply fully with Financial Conduct Authority (FCA) regulations”.
The incentive scheme will also promote the development of skills and knowledge across the motor finance sector, encouraging the uptake of specialist finance qualifications from industry bodies, such as the Institute of the Motor Industry (IMI) and the Finance and Leasing Association (FLA).
Spencer Halil, director of Alphera Financial Services, said: “With greater regulatory scrutiny than ever before, treating customers fairly has never been more important for motor retailers.
“Instead of asking our partners to prioritise contract volumes, Alphera’s incentive scheme encourages a single-minded focus on raising customer satisfaction through the application of specialist skills and knowledge and FCA-compliant sales practices.
“We expect the FCA will have something to say about the way the car industry incentivises salespeople when its final motor finance report comes out this year, so now is the time for dealers and car finance brokers to ensure they’re engaging with customers in a positive way.”
The FCA was expected to publish the findings of its investigations into automotive finance back in October, but has yet to deliver its verdict on the sector.
In July last year, the FCA once again highlighted the area of motor finance which remain worthy of scrutiny as it published its Annual Report and Accounts 2017/18.
Reflecting on the key pieces of work undertaken by the organisation throughout 2017/18, the document said that the lenders it had reviewed appeared to be adequately managing the risk to their business from a potential fall in car prices.
However, the FCA said that it had found some areas of concern, such as increasing arrears and default rates for customers with the lowest credit scores and some poor practices in the way firms provide information to customers.
It added: “We also found that some commission structures could lead to higher motor finance costs if not properly managed by lenders and brokers.”
The Alphera customer survey asks a series of questions of its partners’ finance customers, centring on: the ease of doing business; the ability of sales staff to accurately assess their demands and needs; their satisfaction in the sales process and sales person; and the clarity of information provided.
Dealers and brokers will receive points according to the level of customer satisfaction achieved.
Keeping tabs on compliance
Businesses subscribing to the Alphera incentive scheme can gain bonus points for staff education when their sales specialists complete the IMI’s finance and insurance accreditation scheme, which was launched in 2018 in partnership with Alphera.
The same education bonus will also be applied if participants achieve the FLA’s ‘SAF Advanced’ qualification.
Partners achieving the highest number of points will be offered one of 10 spaces on an educational trip to the 2020 National Automobile Dealers Association (NADA) Show in Las Vegas.
Furthermore, Alphera will incentivise customers to participate by pledging £1 to Alzheimer's Society for every completed survey.
During their participation in the scheme, Alphera partners will receive monthly updates detailing their performance and, following the incentive, Alphera will share a report detailing their performance throughout the nine-month period.