Firms have until April 30, 2023 to fully implement the Consumer Duty and the Financial Conduct Authority (FCA) expects to confirm any final rules by the end of July 2022.
I’m conscious that flagging a regulatory change that needs to be finalised a year ahead of the deadline may seem odd.
But I make no apology because I know how hard we are working to ensure we make all of the changes we need to make.
I’m keen to ensure that dealers have the Consumer Duty clearly on their agenda for action, regardless of business size.
With a press release entitled ‘FCA to introduce new Consumer Duty to drive a fundamental shift in industry mindset’ issued on December 7, the FCA made it very clear that it expects significant change to ensure financial credit markets work well for borrowers.
While the final rules will not be finalised until July, at approaching 200 pages the FCA’s consultation paper published last December is very largely prescriptive, containing plenty of information about the changes sought.
Dealers and lenders need to consider how well their existing model embraces the outcomes sought by the FCA.
As a flavour of the span of change sought, they include the governance of products and services, price and value, consumer understanding, consumer support and more rigorous processes and controls.
To crystallise the importance for dealers to act on change now, the FCA’s consultation paper noted:
‘We would generally expect firms with a direct relationship with the end user to have greatest responsibility under the Consumer Duty. However, all firms that have an impact on consumer outcomes will need to consider their obligations.’
It’s a significant change for lenders and dealers. We all have a role to play in delivering good outcomes for customers.
The board or equivalent management bodies of lenders and dealers will be responsible for assessing whether it places consumers’ interests at the heart of their activities to deliver the type of good customer outcomes the regulator expects of firms to be consistent with the Consumer Duty.
The principles behind the Consumer Duty will apply equally, but there are specific requirements for lenders and dealers.
As a result, we will work hand in hand with our dealers in the coming months to make sure that together we deliver good outcomes for customers, and we’ll continue to support dealers in any way we can
At MotoNovo, we led the market in developing our distinctive risk-based pricing model MotoRate to embrace the ban on discretionary commission that came into place in January 2021.
Now a multi-award-winning model, it continues to deliver compelling evidence of its role in delivering good customer and dealer outcomes.
I want to close by pointing to the positive impact of regulation on dealer finance overall.
Consistently, we have seen over a number of regulatory changes that creating ever-better customer journeys has helped to enhance consumers’ awareness, knowledge and confidence of the unique attributes of dealer finance. As a result, the market has grown.