An April 30 deadline for motor finance providers to issue product reviews to their retail partners will put car dealers on a “compressed timeline” to deliver compliance with the Financial Conduct Authority’s new Consumer Duty regulations.
That is the view of iVendi chief executive James Tew, who warned retailers that a shortage of time to act on reviews and integrate findings and procedures into their business model ahead of the July 31 deadline for Consumer Duty’s roll-out will create a “pressure cooker” in the sector.
“It’s a compressed timeline and is going to create something of a pressure cooker three months for dealers”, said Tew.
“These reviews are likely to be detailed and will need to be incorporated into procedures and fully explained in training.
“For example, where a review of a product details factors such as the target customer, as well as identifying vulnerable customers, the dealer will need to build the findings into their systems as well as ensuring that staff fully understand them. The same principle applies to all the contents of the reviews across all regulated finance and insurance products.”
Back in October AM reported from the BVRLA annual conference, where automotive retail businesses were reminded that they have until the end of October to "make a plan and do what it says" to comply with the Financial Conduct Authority’s (FCA) new Consumer Duty regulations.
In December AM was warned that unprepared car retailers could be “heading for a fall” if they do not act fast to ready their businesses for 2023’s ramp-up in compliance challenges in a webinar hosted by Keyloop.
And in January the FCA issued focus points for regulated firms after its review of a sample found some were well behind in their planning just six months ahead of Consumer Duty rules coming into effect.
According to Tew, a key point for dealers is whether to use digital or manual systems to ensure Consumer Duty regulations are met.
“The systems used by dealers, both online and in the showroom, need to ensure not only that the relevant points highlighted in the product reviews are followed but that processes are tracked and recorded in a manner that is auditable and makes them available for review,” he said.
“This can be done using manual, paper-based systems but, in the real world, few dealers are choosing to follow that path. Digital processes are simply much, much better at this kind of job and we have already been working with many of our customers to ensure they are prepared for this moment.”
He added that the July 31 deadline did not mean that dealers could then take a break because the process of reviewing outcomes and making changes designed to bring about improvements would then begin.
“Dealers have historically siloed compliance and served all the core regulatory requirements in one go. This is often done post-application. Our interpretation of Consumer Duty means that this should no longer be the case.
“Positioning the right product to the right customer should be carried out pre-application, something that iVendi has done for many years but is further enhanced with the new regulations.”