Higher standards for better outcomes
The FCA’s recent comments on Motor Finance, and PCP products in particular, sounded positive and leave me feeling optimistic.
Ahead of the publication of the organisation’s full report into motor finance sales in September, it would seem that the FCA doesn’t have a problem with PCPs per se. But the message is clear: that dealers should focus on proper qualification of needs and the transparent presentation of products, to match the right product to the right customer.
It is the responsibility of the dealership’s F&I business manager to ensure that they have properly qualified a customer and have made all the necessary affordability checks. This process is particularly important in the eyes of the FCA. If done properly, this can be highly informative for the customer, providing them with a deeper understanding of the finance products on offer and make them aware of their repayment obligations.
However, it is the responsibility of the finance provider to educate dealers in the first place, to ensure they sell motor finance in a clear and transparent manner. It is incumbent on companies like Alphera to help improve standards of sale – something the whole industry should aspire to.
We fully support this aspiration and, to this end, Alphera has established a partnership with the Institute of the Motor Industry (IMI) to promote the uptake of a new accreditation scheme for finance and insurance sales specialists. The concept of training and accreditation is widely accepted for practical disciplines across the motor trade. However, until recently, no universal scheme has existed to ensure high minimum standards are followed across the industry for the sale of car finance and insurance products.
Alphera’s own research has confirmed that such a scheme is supported by prospective customers. We recently commissioned an independent survey of UK car buyers, in which four out of five (79%) respondents said they would be more likely to transact a finance deal on a car from a dealer with a formal industry-approved qualification. Consumers believe such a qualification could reduce the chance of being mis-sold a finance product.
The IMI’s new F&I Accreditation, backed by Alphera, represents a significant step towards establishing higher standards of sale in the motor retail sector. It provides a platform for self-regulation to support compliance, and renews customer confidence in the advice and service they receive. Staff enrolled in the accreditation scheme will benefit from a clearer understanding of how to confidently approach the topic of affordability with customers. They can also make sure that would-be car buyers are sold the most appropriate finance product based on an in-depth assessment of their needs. A customer who feels that they have been treated fairly and empowered to make their own informed decision is more likely to return to that business in future.
The accreditation scheme complements established training programmes from the Finance and Leasing Association, and enables a more practical, hands-on application of skills and knowledge than more theoretical learning platforms. The recognised accreditation scheme allows sales staff to develop confidence in their skills and knowledge through practical, non-academic programmes and assessments.
Alphera and the IMI hope to engage dealers and other lenders to grow the uptake of this accreditation programme. We encourage our partners and others in the industry to challenge us to do better, as we believe that finance companies are there to support dealers and help develop sales best-practice. This starts with ensuring that sales teams understand everything they need to about the products they offer, and the right way to match them to customers’ needs.
F&I can be simple and clear, and it is our role to help ensure that relevant staff have the confidence to present products properly, to give car buyers every reason to return with their custom in the future.
Introducing a ‘common standard’ will demonstrate to the FCA and car buyers that the motor industry is worthy of their trust and confidence.