Automotive retailers brace for rise in FCA scrutiny: paper provides guidance
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Automotive retailers are urged to embrace digitisation of traditional paper-led processes to assist with compliance and avoid a rise in the consequence of breaches reported. FCA scrutiny is on the rise which can lead to heavy fines or other penalties impacting on already stretched margins. In the face of an estimated £300 million in customer overcharges annually, the FCA is requiring retailers to call in independent auditors. Up to 4 years of transactions are audited across each automotive group and provide redress and reimbursement expected to those clients identified as having suffered loss as a result.
Motor finance has been on the FCA radar for a while, launching its review of the motor finance market in 2017 and publishing its final findings in a report earlier this year. Highlights include the following:
- Changes to the way in which commission works in the motor finance sector
- Rethinking commission models which allow brokers discretion to set the customer interest rate and earn higher commission - overcharging unsuspecting customers over a thousand pounds in interest charges in order to obtain bigger commission pay-outs for themselves is estimated to cost consumers £300 million annually.
- Tackle obligations in relation to pre-contract disclosure and explanations, and affordability assessments. Mystery shopping found that disclosures were not always complete, clear or easy to understand, falling short on assessing creditworthiness including affordability.
- All firms need to review their policies, procedures and controls to ensure they are complying with all relevant regulatory requirements and are treating customers fairly.
Download the white paper:
Shifting gears: understanding the Financial Conduct Authority’s stance on car finance
Designing processes, optimising systems and implementing greater control should be on dealer radars with the aim of keeping retailers alive, healthy and compliant without overburdening the business. It’s time for a fresh approach and thinking that leads to improved regulatory dialogue and positive outcomes.
Find out more about digitising processes across the dealership including deal files, service,affinity schemes, HR and finance by visiting www.mstore-auto.co.uk or contact the automotive team automotive@arenagroup.net.
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