FSA Automotive in the Press
The following articles have been published recently:
FSA Tightens up on Selling of PPI
18th June 2007
Automotive Management (Author: Tim Rose)
FSA officials are visiting motor retailers and other small businesses until the end of this month as part of their monitoring of payment protection insurance (PPI).
Andrew Honey, head of insurance in the Small Firms Division of the FSA, said: “We will visit more than 100 firms to see if there has been improvement in selling practices since last year, when we found some firms were getting things wrong, particularly when selling PPI alongside credit, such as motor finance, and loans.”
Nine businesses have been subject to enforcement action by the FSA in the last year, two of which were motor retailers. Cathedral Motor Company, which trades as Arbury in the Midlands, was rapped in March over failing to monitor its staff and training on PPI sales.
That followed similar findings in December at Eastern Western Motor Group, which was censured over record keeping, training and not providing customers with a statement of total PPI price.
Honey added: “During visits we speak to firms’ management and those selling to customers to assess the adequacy of sales and advice processes, including the controls in place. We may also look through files to see what story they tell about the information given to customers and the stage of the sales process when that information was provided. This gives us a good overview of whether customers are likely to achieve a fair deal.”
The FSA says many dealers find the visit positive, as they are able to work with the organisation to make any necessary improvements. Getting the sales process right and ensuring the documentation is clear can benefit both customers and the business, says Honey.
The statement of demands and needs is an important part of the information dealers must give to customers when selling PPI. Honey said it is only of use if it provides a clear picture of customers’ needs and why they have been sold a product.
Most dealers use templates or online tools to create the statements, showing a clear path from assessment of needs through to the product chosen.
However, some statements of demands and needs need to be tightened up, and dealers must ensure their staff are disciplined about completing them, said Honey.
He added: “We expect improvements this time round, with firms taking the customer-focused approach from their main business of selling cars or motorbikes into their regulated insurance sales. We will be feeding back our findings, including examples of good and poor practice that we have seen, later this year.”
Shane Craig, managing director of PPI provider Paymentcare, says one way dealers can help ensure customers are treated fairly is through a monthly paid policy. Alternative single-premium PPI policies have attracted criticism for not being in the customer’s best interest.
“The cost of these policies is added to the loan and the whole amount then gathers interest, making the PPI more expensive than necessary. A monthly paid policy from an independent provider offers better value for money and can be cancelled at any time, ensuring that customers only pay for the cover they actually need,” added Craig.
FSA advice on selling PPI fairly:
- Make sure staff explain clearly what the policy will cover. There is no point in a customer buying a product that they are not eligible to claim on.
- Be clear about what it will cost. There are different ways of paying the premium and some are more costly than others. The premium, any interest payable and the total amount payable – premium plus interest – should be clearly stated
- Make sure the customer knows that buying PPI is optional.
- Click here for information on the FSA’s PPI project.
Small firms not under the regulatory radar, says FSA
22nd May 2007
Automotive Management
The FSA’s Director of Small Firms warned small retail businesses today that they are not free from regulation.
Speaking at the Financial Adviser Expo this morning, Stephen Bland told the conference that the misconception that small firms can escape the FSA’s attention is tarnishing the industry.
“We are sending a very clear message that small retail firms are not under the radar,” said Bland. “Our regulatory approach is based on giving help to firms who run their businesses while Treating Customers Fairly and endeavouring to do the right thing, but coming down hard on those who don’t.”
The FSA’s risk-based regulatory approach allows it to supervise small firms and take action against those who pose a risk to consumers.
FSA Rules Ignored
27th March 2007
Motor Trader
Nearly three-quarters of customers are not told about the Financial Services Authority regulations governing finance sales when they buy a new car.
Buyers are not fully informed
A study by FSA Automotive claimed 72 per cent of customers had no recollection of sales staff mentioning FSA procedures when they bought a car from the group – which did not wish to be named.
FSA Automotive’s technical director Tony Hodder said: “More surprising was that only customers who had signed demands and needs statements were contacted.
“I am sure the dealers in question thought they could prove compliance but this practice is not treating customers fairly, which is one of the FSA's biggest priorities for motor retailers.”
Customers not treated fairly
Hodder said the findings showed that in the majority of cases “sales people are just going through the motions to appease managers who in light of recent actions from the FSA are applying pressure for signed statements in deal files”.
“Many dealers are missing an opportunity to recommend further products to the customer. Additional products could add £600 to each deal, during March especially.
That could have a huge impact on any business’s bottom line,” Hodder added.
Since January 2005 it has been illegal for dealers to sell insurance products such as finance payment protection, Gap insurance and warranties without complying with FSA regulations.
FSA Rap
Last month the FSA imposed a public censure on Cathedral Motor Company over failures regarding the sale of payment protection insurance.
The Midlands group, with four sites under the Arbury name, was ticked off for failing to organise and control its regulated business responsibly and effectively.
FSA director for enforcement Margaret Cole said: "The sale of PPI is a priority for us due to the high potential risk for consumers in the way this product is sold and we are determined to see much better practice in this area.
“This is the second enforcement action we have taken against a car dealer in connection with PPI sold on vehicle finance agreements.”
FSA Automotive highlights missed opportunity for dealers
8th March 2007
FSA Automotive
Nearly three-quarters of customers are not told about the FSA when they buy a new car, according to new research by FSA Automotive.
FSA Automotive completed a survey on behalf of a major dealer group, in which 200 customers were contacted after delivery of their new vehicle.
The customers were telephoned and asked specifically about the FSA procedure during their purchase experience and whether they found it beneficial.
A staggering 72% of the customers had no recollection of the FSA being mentioned during their purchase.
“More surprising was only customers who had signed demands and needs statements were contacted," said Tony Hodder from FSA Automotive.
"While I am sure the dealers in question thought they could prove compliance, but this practice is not treating customers fairly which is one the FSA's biggest priorities for motor retailers.
Hodder said the results show that in the majority of cases ‘sales people are just going through the motions to appease manager who in light of recent actions from the FSA are applying pressure for signed statements in deal files’.
“Many dealers are missing an opportunity to recommend further products to the customer in line with their genuine needs that they may purchase, we all know additional products could add £600 to each deal, during March especially, that could have a huge impact on any businesses bottom line" Hodder added.
Hodder highlighted one customers case who did recall being asked to sign a sheet when collecting her new car and when she questioned what she was being asked to sign was told by her sales executive: “We have to do this for the FSA but as you are paying cash it doesn't really concern you."
FSA Launches Compliance Aid
11th January 2007
Automotive Management Online
FSA Automotive has launched a customer presentation software package which dealers can use to ensure they are following procedure when selling insurance products.
The new product has been launched under the branding of ‘FSA Automotive’s Treating Customers Fairly Process’ (TCF).
TCF is a showroom presentation that takes FSA accredited personnel and customers through a fact find and recommendation process that doesn’t need to be integrated with any dealer management system the dealer may already have installed.
The new software that can be implemented, either web-based or dealership stand alone, ensures the correct procedure for issuing all the legally required documentation, personalized to the customer and provides the dealer with accessible mandatory records required for an FSA or internal audit.
FSA Automotive said: “When the dealer goes through our structured FSA Automotive TCF Process of qualification and customer data capture with every customer, in a compliant and professional presentation, the customer gains a better understanding of the dealers responsibilities of due care in assessing their needs.
“Recommending products, in a professional manner that match their needs has lead to an increase in the purchase of insurance products, ultimately increasing the dealer’s bottom line whilst securing their FSA compliance.”
To learn how to increase revenue and ensure FSA compliance today please contact FSA Automotive on info@fsa-automotive.co.uk
[Back to Top]
FSA launches motor retail-specific compliance training facility and launches programme of checks
11th January 2007
Auto Industry
Having recently suspended an unnamed major dealer group from insurance sales authorisation, FSA Automotive Ltd claims to be “leading the way out of the mystery of FSA compliance” (with insurance sales regulations) both for dealers and customers with the development of a new customer-friendly presentation process and software that ensures car retailers follow the correct procedures, encompassing the FSA’s “treating customers fairly” policy, when selling insurance products.
It has been illegal for a vehicle dealer to sell insurance products such as finance payment protection, GAP Insurance, warranties etc without being registered and complying with the FSA’s regulations since January 2005, but recent developments with a major dealer group, now under suspension, has highlighted as issues for the retail motor sector the lack of management control, failings in paying due regard to the information needs of its customers and communicating information to them in a way that was clear and consistent, along with inadequate record keeping of FSA-compliant documentation in customer files.
The FSA has now set a deadline for the end of March 2007 by which firms must have gone a long way towards implementing their ‘TCF’ strategy, telling dealers to expect a telephone call.
The new product has been launched under the branding of “FSA Automotive’s Treating Customers Fairly Process” (TCF), a showroom presentation that takes FSA-accredited personnel and customers through a logical and friendly fact finding and recommendation process. The new software that can be implemented in either web-based or dealership stand-alone form, ensures the correct procedure for issuing all the legally required documentation, personalized to the customer, from an “Initial Disclosure” to a “Statement of Price” and provides the dealer with easily accessible mandatory records required for an FSA or internal audit, should a complaint or query arise.
Tony Hodder of FSA Automotive maintains that, “Results show that when the dealer goes through our FSA Automotive TCF Process capture with every customer, in a compliant and professional presentation, the customer gains a better understanding of the dealer’s responsibilities of due care in assessing their needs, and it enables the customer to make an informed decision about insurance products. Gone are the days of the dealer selling you something that suits their needs not yours."
The new product is currently under testing with Honda, and is due to be released nationally at the end of January to all franchises.
For more information email info@fsa-automotive.co.uk
(www.fsa.gov.uk/Pages/Doing/small_firms/motor)
[Back to Top]