Ensuring compliance across all sales channels should be the primary concern for motor finance companies, not just in their captive showroom systems, says motor retail technology provider iVendi.
According to the company, many operators appear to be focusing on the compliance of their own captive showroom systems without confirming that third party platforms and other routes to market also meet the requirements.
James Tew (pictured above), chief executive officer at iVendi, pointed out that as a result of the significant variety of physical and online channels used by motor finance companies and their intermediaries, the FCA’s view on discretionary commission creates something of a challenge.
He explained: “The January deadline is only a few months away and more uniform processes and disclosures may prove to be a much more difficult task than first imagined. Lenders have different commission models across their product ranges and as such the ‘nature’ of these, to use an FCA term, needs to be disclosed against each of them.
“Also, increasing the prominence of the availability of commission will most likely require changes to the online finance journey presented by retailers using products such as ours and ensuring that everything is compliant on the day the regulations come into effect is very much a priority for us.”
Tew added that there were several grey areas surrounding the way the FCA regulations would be operated by motor finance companies. He said: “This especially applies to the ‘nature’ of commission disclosed. There is some debate over exactly how this should be interpreted. The finance companies with which we are in dialogue often have different views. As virtually every dealer works with multiple lenders, this needs to be managed by both dealers and system providers to cater for their digital and analogue processes. Of course, there can be more than one interpretation but each needs to be justifiable.
“With each lender operating multiple commission models against their range of products and retailers working with multiple lenders, there’s certainly going to be plenty of housekeeping of this type that needs to be addressed. It is a question of coming together to arrive at forms of wording that are honest and compliant, and can be easily understood by motor finance customers.”