Sales Procedure Guide
Sales Procedure Guide
3.1 // Disclosures
Evolution has built robust processing systems to support and evidence the presence of disclosures to consumers, many of which are included in our Sign Anywhere customer journey. However, our introducers must also meet their obligations.
We recommend dealers review their sales process to ensure all appropriate disclosures, adequate explanations, and the right to withdraw are given to customers in good time. We consider customer suitability in line with CONC rules and expect our dealer partners to do the same. This includes CONC 2.5.3 and 4.2.5 R, which state:
A firm must: 2.5.3 R (1)
“Where it has responsibility for doing so, explain the key features of a regulated credit agreement to enable the customer to make an informed choice as required by CONC 4.2.5 R.”
2.5.3 R (2)
“Take reasonable steps to satisfy itself that a product it wishes to recommend to a customer is not unsuitable for the customer’s needs and circumstances.”
4.2.5 R (1a)
“Provide the customer with an adequate explanation of the matters referred to in (2) in order to place the customer in a position to assess whether the agreement is adapted to the customer’s needs and financial situation.”
Matters referred to in (1a) include but are not limited to:
4.2.5 (2a)
“The features of the agreement which may make the credit to be provided under the agreement unsuitable for particular types of use.”
Please ensure your sales process includes providing the customer all appropriate sales disclosure documentation. Evolution will supply the finance provider’s agreement and PCCI, as well as our IDD and adequate explanation video/document.
As Evolution offers both Hire Purchase and Fixed Sum Loan Agreements as standard product choices, you must ensure that your sales process and training make provision for identifying agreement types and adequately explaining the differing features of these products to the customer.
It is essential that this covers all types of agreements you broker, including those through Evolution Funding (e.g. Hire Purchase, Personal Contract Purchase, and Fixed Sum Loan Agreements. Our adequate explanation document or video refers to this requirement. The adequate explanation video/document provided with the agreement will contain all information regarding the agreement features.
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Initial Disclosure Document (IDD)
The dealer is responsible for supplying the customer with their status disclosure details. We automatically provide our Initial Disclosure Document (IDD) to every customer within our journeys (e.g., emails and Sign Anywhere).
Whilst there is no specific rule that you must supply all consumers with an initial disclosure document, the IDD is the most concise way to meet several regulations by providing the required disclosures before the customer proceeds with the application. Furthermore, it meets the requirement of being transparent and prominent.
If you choose as a business not to supply an IDD, you must make sure you can meet and evidence you can meet the following rules:
- GEN 4 Annex 1 – covers general status disclosure requirements, e.g. authorised and regulated, credit broker, etc.
View Gen 4 Annex 1 - CONC 4.2 – covers disclosures at pre-contract stage and adequate explanations.
View CONC 4.2 - CONC 3.7 – covers financial promotions and communications.
View CONC 3.7 - CONC 4.5 – covers commission disclosures
View CONC 4.5 - DISP 1.2 – covers consumer awareness rules and the requirement to explain to the customer about how to complain.
View DISP 1.2
If you do not currently supply an IDD to your customers, our Consumer Duty Resource Hub includes a guide and template to help you produce one for your business.
Commission Disclosures
The FCA has implemented PS20/8 rules regarding commission disclosure, and all our dealer partners need to ensure that they adhere to both Evolution Funding’s standards and those of the Financial Conduct Authority.
Before the customer has made a final decision, you should disclose to the customer the existence and nature of any commission or other remuneration received from the lender or broker and how it may affect the amounts payable. This can be in general terms and doesn’t need a tailored illustration, but it should be prominent and clear. Details can be found in the section below.
The content you include in your commission disclosure should consider the following:
- Is the disclosure adequately prominent?
- Does it detail the commission arrangement’s existence and nature, including how it impacts the total amount the customer pays?
- Is it a fixed amount or percentage of the balance?
- Does the description cover all possible variables?
- Do you have a process to disclose the amount or likely amount of commission if the customer requests it?
- Are your processes and controls robust enough to ensure they’re always following the regulatory requirements?
Pre-Contract Consumer Information
PCCI (or Pre-Contract Consumer Information) was previously known as the SECCI, but the content of the document provided by the lender has not been altered.
For more information on pre-contract disclosure and adequate explanations, please refer to CONC 2.5 (conduct of business for Credit Broking) and 4.2 (pre-contract disclosure and adequate explanations).