All about the Brand
A broker approached us recently looking to become a member, which involved our Business Development Manager learning a little bit about them
They said they would find it difficult to provide multiple references or evidence of loans arranged through three nationally recognised commercial lenders, because they always used the same lender.
This is troublesome from the FCA’s perspective, because it suggests the client isn’t being walked through a bunch of alternative solutions, and therefore might not be guided to the best one. A product offered by a lender who isn’t on this broker’s shortlist of one might be the perfect solution for the client – but the client will never know.
It’s not a very tricky balancing act. We don’t ask that our brokers are up to date on the offerings of all 200+ active commercial lenders. Equally, we do think they should feel able to approach more than just one. The FCA’s view is that if you don’t outline a number of options, you’re not being seen to have done your job.
But now let’s imagine the client has a fixed opinion on the product he’d like to invest in. Brand loyalty is beyond reason; the FCA must hate the idea that one of my relatives hasn’t bought a car that wasn’t a Toyota in thirty-five years. No matter who gave him advice that other manufacturers exist, and might even offer products that are in some ways superior, he would not be budged.
While most of us consider ourselves to be good rational human beings, we’re entirely comfortable with making exceptions just because we don’t “get” Alfa Romeo or we think a £15 box of chocolate marzipan is really going to be five times more almondy than the £2.99 one. Compared to some of the decisions we make ourselves, there really is logic in the fleet company that swears by LDV or Mercedes and would never let a Fiat into the ranks, for example. Brand is connected to image, and image links up to marketing; the badge on the front of the vehicle is a representation of the company that runs it.
Even if a case could be made showing £10k per annum running and servicing cost savings by switching to Fiat, we know this company would never allow the change. It would be as futile as asking a football fan to switch away from the team he or she has an allegiance to (and maybe a season ticket for as well). The question “what’s in it for me” wouldn’t even need to be asked. Pure logic has no place in some of our decisions.
So should the commercial finance broker even bother raising the subject of alternative providers? To skip that part of the job raises questions about transparency and completeness of information. But to hint to the Iveco convert that he should consider other brands – when you know he won’t – gives the impression that after all this time with the client, you haven’t listened and you’ve failed to tailor the advice to the client. This doesn’t look like best practice, any more than non-disclosure would.
Allowing a client to behave irrationally – in the strictest non-judgmental meaning of the word – puts you in a bit of a grey area. Perhaps the best approach is to say “I know you will not consider alternative recommendations, but I have written them up for you anyway.” And put it in writing. Writing which is unread is still writing…but then if you know your advice isn’t being read, are you doing your job?
I’d say the FCA still has to be properly tested on their insistence on following the letter of the rulebook, and in the meantime, having everything in writing, and verifying it’s been read, is the target to aim for.
What happens after that is your client’s business, and if that means a rationally inappropriate solution, cut them some slack for being human and move on!