Car retailers have been told “there can be no compromise” when it comes to the technology leveraged to ensure compliance with the Financial Conduct Authority’s (FCA) new Consumer Duty.
James Tew, the chief executive of motor retail technology provider iVendi, said customer journey tracking and the gathering of auditable finance agreement data would have to be implemented to ensure retailers do not find themselves in breach the new regulations’ core principles.
Sharing his views as the business attempts to work with retailers to adapt to the changing motor finance regulations, announced in July, Tew said: “The FCA has been explicit that the new principle very much raises the bar when it comes to how customers are treated when being sold finance products – and the motor retail sector must react accordingly.
“Essentially, it places an onus on dealers and motor finance companies to track consumer activity every step of the way, whether that is happening online or in the showroom.
“The decision-making process and the information placed before the consumer at every point must be recorded and auditable. Those who cannot do this – and there are quite a number of them, in our experience – run the risk of potential action.
“We believe that the systems that we offer already meet the requirements that the FCA has outlined but this is an area we are investigating closely and will be discussing in detail with the dealers and lenders with which we work.
“It’s a subject around which there can be no compromise and we are committed to ensuring that the technology we provide does as much as possible to ensure that the new principle is met in full.”
AM editor Tim Rose hosted a webinar on the new FCA Consumer Duty and its implications in partnership with legal firm Freeths last Thursday.
Back in July AM reported how the FCA had shifted its expectations of finance firms and dealers from the old "treating customers fairly" principle to now an adage of "put their customers' needs first" with its changes.
Speaking at the time Sheldon Mills (pictured), executive director of consumers and competition at the FCA, said: “The current economic climate means it’s more important than ever that consumers are able to make good financial decisions.
"The financial services industry needs to give people the support and information they need and put their customers first.
“The Consumer Duty will lead to a major shift in financial services and will promote competition and growth based on high standards.
"As the duty raises the bar for the firms we regulate, it will prevent some harm from happening and will make it easier for us to act quickly and assertively when we spot new problems.”
Tew acknowledged that the FCA had explicitly indicated that the move to Consumer Duty had a strong relationship to how personal finances would be affected by the expected forthcoming recession.
He said: “The FCA are anticipating that the cost of living crisis will have an impact on personal finances within the next few years, and want to make sure that customers are receiving the best possible advice, guidance and product choices within that framework.
“While Consumer Duty doesn’t take effect for 12-24 months, there is every reason to expect that the FCA will want our sector to up its game as we face what could be the worst recession in a long time. Motor retail should be taking note of this shift in tone.”