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New FCA regime highlights F&I professionals’ duty to ‘stay competent’

Gerry Kouris of Alphera Financial Services

On December 9 this year, the Financial Conduct Authority’s (FCA) Senior Managers and Certification Regime (SMCR) for consumer credit firms – including motor finance sellers – comes into effect.

The FCA sees SMCR as a catalyst for change, encouraging greater accountability for individuals responsible for selling consumer finance products, and setting a new standard for personal conduct.

The SMCR introduces a new level of accountability for finance professionals, a holistic approach through which knowledge, skills and education are considered critically important.

It marks a step-change in how senior managers should approach their role.

They shouldn't simply view their position as a fixed, unchanging job, with their skillset preserved in aspic for the full length of their career. Instead, finance selling should be seen as an evolving and dynamic profession which requires continuous personal development and an ever-deepening knowledge of how the industry operates.

Indeed, the fast-paced nature of our industry means that F&I professionals have a duty to keep abreast of consumer trends, existing and new regulations, and other macroeconomic factors.

This new accountability regime promotes the idea that those responsible for the sale of consumer finance need to understand more about the industry and ensure best practice in sales, rather than simply knowing what each product is.

Theoretical knowledge is not enough anymore. Sales specialists need to be able to practically demonstrate their expertise in their dealings with customers.

In a recent interview for the Inside FCA Podcast, Jonathan Davidson, executive director of supervision for retail and authorisations, commented that financial misconduct is not necessarily a result of negative intent by the sales person, but rather of lack of competence.

The SMCR covers all vehicle finance sales professionals to an extent, whether they work for a broker, lender or dealership. With a greater focus on individual accountability, it therefore means individuals must continue to learn and develop to ensure they remain at the top of their game.

And working with organisations like the Finance and Leasing Association (FLA) and the Institute of the Motor Industry (IMI) can help professionals achieve this on an ongoing basis.

The IMI's Finance & Insurance accreditation programme, for instance, is a prime example of a qualification where professionals are assessed on their knowledge in a robust and practical manner.

In order for individuals to retain their accreditation over the long-term, a minimum amount of annual CPD is required.

On top of that, the accreditation needs to be retaken every three years, ensuring specialists continue to develop and enhance their skills and knowledge.

Alphera Financial Services has been vocal in its support of this programme, and believes accreditation and other courses available through the IMI and FLA (e.g. the Specialist Automotive Finance Advanced qualification) hold the answer to compliant finance sales.

With motor dealers and finance brokers under more scrutiny than ever by the regulator, accountability and professional development have never been more important. Education and knowledge lies at the heart of a fully-compliant sales process.

Returning to Jonathan Davidson’s comments from the recent Inside FCA Podcast, he said: “What I hope it leads to is a culture where people think about their jobs almost as a profession; they have a continuing professional development approach to their careers, they need to stay up, they need to stay competent.”

By making professionals personally accountable and encouraging them to ‘stay competent’ through continuous professional development, the FCA’s SMCR will help sellers ensure positive customer outcomes with every sale.

For sellers and brokers of vehicle finance, the programmes such as the IMI’s accreditation scheme can help them achieve this.

Author: Gerry Kouris, marketing manager, Alphera Financial Services

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