MotoNovo Finance has offered their advice to dealers following the close of the FCA’s consultation period on proposals to ban discretionary commission models.
The models were enabling brokers to set and adjust their own interest rates, with inflated rates passed onto consumers.
The industry is awaiting the FCA’s final policy statement regarding the rules on commissions, with regulation expected to be implemented in the second half of 2020.
MotoNovo said they are “determined to take a lead in helping the dealer community to be ready and able to turn challenge into opportunity”.
Chief executive of MotoNovo Mark Standish said: “Embracing FCA regulation to ensure the fair treatment of customers consistently can create a good customer outcome and a good dealer outcome at the same time.”
Dealers have also been urged to create fair outcomes sought by the FCA, with customer success at the heart of the dealers approach.
MotoNovo also said, in developing a customer-led ethos all areas of financing need to be considered from a customer perspective, generically and at an individual level including in the design of financial promotions, in sales interactions and ongoing service.
The company also said compliance with standards may mean change but getting a customer win can also mean a dealer win, and in a challenging market this could be “crucial”.
Standish said: “With new car finance data indicating a finance penetration of 91.2%, while used car penetration often lingers at under 20% and at best circa 40%, there is a huge opportunity for dealers; one that can be realised by delivering good customer outcomes consistently.”
The company said while much industry focus has concentrated on the £165 million annual credit saving to customers that the FCA identified in its October 15th consultation paper, MotoNovo is clear that dealers need to look to the positive opportunities the paper presents; they also need to recognise the threat of not changing.
Standish added: “The vast majority of people buying a car need finance as the current new car finance penetration evidences. If dealers fail to fulfil this customer need in a compelling, timely and compliant fashion, then in today’s increasingly digital car retailing environment, they risk losing not just a finance opportunity, but the car sale as well. However, get the customer finance experience right and car buyer and dealer can benefit.
“We need to take dealer finance online with the type of Self-Serve capability that customers want and which we offer dealers, or risk losing the opportunity. With tools such as findandfundmycar.com and new pricing mechanics, we can transform used car finance to benefit car buyers and dealers. Changing to embrace new ways of promoting and delivering used car finance to sell cars is critical. Rather than wait, dealers can make these positive changes today and we can help them to achieve them,” he concluded.