Car dealers could risk damaging their long-term relationships with customers if they fail to handle the FCA-mandated affordability test sensitively, vehicle e-commerce solutions provider iVendi has warned.
The new FCA regulation is likely to require more detailed information about customers’ personal finances than existing motor finance applications. This has lead to fears that the inevitable questions around income or the personal changes in circumstance might make customers uncomfortable.
James Tew, chief executive officer of iVendi, acknowledged the fact that in-depth financial questioning would be a new area for dealers: "It is unlikely that your motor finance provider has been using an application process that employs anything other than fairly blunt criteria designed to assess whether a potential customer can actually afford the car that they want. Filling in the average application form has generally taken a matter of minutes."
He described how under the new regulation the application process is set to become more sophisticated as it is designed to determine whether the customer can sensibly afford the payments on their vehicle and repayment option of choice.
As such, he explained, dealers must be aware of the higher degree of sensitivity required if they are to maintain productive long-term relationships with customers.
He said: "In essence, dealers need to treat the process with more gravity than has been usual and perhaps have a room set aside where information can be gathered in a calm atmosphere, rather than sitting at a desk on the showroom floor with people milling around.
"The manner of dealer staff also needs to be much more serious and sensitive than has been the case with motor finance applications up until now," he added, "It is a question of finding a tone that makes the customer comfortable about passing over detailed personal information."
Tew concluded: "Getting this right could be a key factor in ensuring that you do not damage long term relationships with customers, and dealers and motor finance providers may want to look at whether training and detailed guidance are needed."