Consumer Duty for Dealers: Burden or Blessing

Jo Davis 
The feedback from clients is that it has been radio silence but I suppose there is a lot to digest!

Richard Hubbard
They have in some cases stated the packs are subject to change and revision subject to FCA guidance on co-manufacturer, etc.

Jo Davis 
Yes, absolutely. You would need to do a relationship assessment as where a party has a decision-making role or otherwise exercises a material influence over the main characteristics and features of a product, they may be co-manufacturing to include influence on pricing. You will need a co-manufacturing agreement. Whichever way you conclude though you must document it to include why you have concluded what you have.

Sam Osborn 
All the lender product information and information on Evolution’s credit broking service can be found on the Consumer Duty Resource Hub which can also be accessed from the login page of DealerZone.

Jo Davis
That is a high-risk strategy – there is a significant amount for them to implement but of course, implementation is proportionate to the size of the business.

Sam Osborn
You only have to do a fair value assessment for the products you manufacture, not those you just distribute. Evolution will be sending out some documents shortly to try and support retailers in this process.

Jo Davis
Don’t forget you are the manufacturer of your broker services where you are distributing regulated products, so you do need to do a fair value assessment of your broker services and a product and services assessment of your broker services as well as implementing other areas of the duty. See PRIN 2A.4.8R-12G for more information when looking at your broker services.

Q
Are there examples of fair value assessments?

Sam Osborn
A number of firms have produced these at a cost. We are looking to give dealers at least a broad structure in the next few weeks.

Jo Davis
We can assist if needed but it’s great that Evolution is doing this.

Sam Osborn
Ensure that the customer is at the heart of your business. Sounds like you are already covering a lot of elements but making sure all that good work is documented, training in place and evidenced, remuneration is driving those good outcomes and you have assessed your credit broking service as offering fair value for the price paid.

Jo Davis
You do need to implement the full requirements of the duty. We are happy to provide training if needed and can do in association with Evolution.

Richard Hubbard
There are a lot of documents referred to in the question, I would encourage people to look at the actions, processes, and outcomes rather than just the paperwork.

Sam Osborn
We are still waiting for lenders to provide data and make any requests of us on data. We will look at what information we can support dealers with once we have a clear idea. Consider what data you have to evidence the outcome of your consumers.

Jo Davis
The FCA provide guidance on the types of data that they are looking for and it will be important as part of your implementation plan to have a data strategy as data will need to be collected across the product lifestyle and customer journey.

Jo Davis
You have to still deliver all the information requirements and explain that it’s a regulatory duty that you have to run through it.

Keith Bell
It’s an abbreviation of ‘Management Information’.

Jo Davis
There are four outcomes and three cross-cutting rules all of which set out new requirements that all relate to reaching good outcomes.  The informed decision test sits under the customer understanding outcome. You must implement all of these into your business, evidence implementation and have good governance and data to monitor compliance.

Richard Hubbard
They are two separate but key phrases, informed decision where the correct information has been provided at the right time will assist in producing good outcomes. The review and implementation of these factors are pivotal parts of the consumer duty requirements.

Richard Hubbard
I would agree having the evidence to show you are both doing and reviewing the right things is important.

Sam Osborn
The FCA has said small dealers should be proportionate in their approach, but customer outcomes should be as good as bigger firms. There are no different requirements for limited permission firms, so you need to complete a value assessment and have enough evidence to prove everything you have covered with the customer.

Jo Davies
It would be really important for you to fully implement all the consumer duty requirements proportionate to the size of your business.

Jo Davis
Yes, if they are fair and they have been assessed as being fair.

Jo Davis
I don’t think it will as my understanding is this situation is a result of the new agency relationship between the captive finance house and the manufacturer.

Jo Davis
They will need to ensure that if a product becomes unsuitable during the lifetime of the agreement, they can resolve, and a change of product is one way to address this. I have seen a few lenders in the throes of implementing this.

Sam Osborn
Perhaps build some flexibility into your systems to capture customer-specific information elsewhere.

Jo Davis
There are many ways to do this and there is no prescriptive approach. Ensuring it is all recorded and evidenced is so important.

Richard Hubbard
Perhaps consider other mechanisms such as a direct survey to customers from you rather than from an OEM or lender or independent mystery shops commissioned by you.

Sam Osborn
You need to be clear on your IDD (or other disclosures) the breadth of your lender panel and any order of placement you are restricted to.  No rules have changed for this – you need to be clear to your customers you work with your panel of lenders and not all the market. You can find further information in our Dealer Health Check document in our Resource Hub, a document we published after PS20/8.

Sam Osborn
If you can use a tool like pre-eligibility to give the customer a tailored, accurate quote early in the journey, giving them the information they need to make an informed choice before they have even fully applied, then this is a process that I think perfectly fits with Consumer Duty.

Sam Osborn
The FCA expect customer outcomes to be the same no matter how small the dealership is. They recognise you will be much more hands-on with individual customers, but you will still need to evidence what you have done to protect yourself if ever challenged.

Jo Davis
Consumer Duty still applies to you and must be implemented.

Sam Osborn
We would describe our services as non-advised.

Jo Davis
It is advisable to stick to non-advised sales in motor finance for many reasons.

Jo Davis
It should not have any impact provided disclosure to the customer is clear.

Richard Hubbard
Agree, it shouldn’t make a difference if the correct processes are in place.

Sam Osborn
There is definitely a market and a need for this as many consumers prefer to transact online. You need to ensure your customer journeys support the four outcomes and monitor the experience and performance of the products sold.

Jo Davis
This is becoming more and more popular and certainly can be more effective for evidencing.

Richard Hubbard
It does feel like the direction of travel for the administrative side of the transaction to be completed away from the dealerships at a time and in a place to suit the buyer.

Sam Osborn
None that I am aware of for Evolution. Our journeys are already automated and time-stamped, providing a clear audit trail.

Jo Davis
Consumer Duty will be implemented into online systems as well.

Sam Osborn
It doesn’t have to be automatically sent; any process is fine as long as it can be evidenced.

Sam Osborn
You can access this information via our Consumer Duty Resource Hub.

Sam Osborn
Yes, we will continue to support and train our AMs on the subject, and we will be publishing more information and support on the Resource Hub over the coming months.

Richard Hubbard
So far, we have raised our concerns and the areas which we feel either fall short of the requirements for Consumer Duty info from lenders or are in conflict with the rules and direction on Consumer Duty. The lenders have acknowledged the points, but we have not had any specific responses to date.

Sam Osborn
The lenders all seem to have approached it differently and a lack of standardisation has made our job difficult, working with a large panel of lenders. Some of our lenders have been very engaged with us through the changes to date and consulted on aligning approaches. Having templates available and manufacturer information provided in the same way would definitely have been helpful for us to pass the information on more easily and clearly to our dealers.

Jo Davis
Yes, this is an option. Product suitability must be evidenced in some way.