The vehicle finance cataclysm – dealing with the fallout!

Vehicle finance
Anthony Hinchliffe By Anthony Hinchliffe, CEO, Ant Marketing

The recent announcement by the Financial Conduct Authority (FCA) regarding its investigation into hidden, unfair vehicle finance commission has sent shockwaves through the automotive industry. This probe has the potential to uncover widespread overcharging, leading to billions of pounds worth of additional interest payments being reimbursed to millions of consumers. As the investigation unfolds, it is crucial to analyse the potential impact on vehicle finance businesses and explore effective strategies for managing the surge in customer enquiries.

FCA investigation – the drivers (no pun intended)

Firstly, let’s delve into the significance of the FCA’s investigation. Vehicle finance has become increasingly prevalent in the UK, with many consumers opting for various financing options such as Personal Contract Purchase (PCP) or Hire Purchase (HP).

In January 2021, the regulator, the FCA banned ‘discretionary commission arrangements’ (DCAs). This stopped lenders from allowing brokers, including vehicle dealers, to increase interest rates on vehicle finance so that they would be given more commission, even though they did no work. It has been deemed an unfair practice, as consumers were not told, and many thought it was a fixed price so did not negotiate. These hidden commissions have resulted in consumers who took out finance prior to 28 January 2021, paying significantly more in interest than they should have, leading to financial strain and dissatisfaction.

“In about 40% of car finance deals, there were hidden ‘discretionary commission arrangements’. This is where lenders allowed brokers & car dealers to up the interest to increase their commission – so you overpaid, without knowing.”

Martin Lewis, Money Saving Expert

The potential outcome

If the FCA’s investigation uncovers widespread unfair commission practices, the repercussions could be substantial. It may lead to increased scrutiny of lending practices by regulatory authorities, stricter enforcement measures, and significant financial penalties for non-compliant firms. Moreover, the potential reimbursement of overcharged interest to millions of consumers could have a significant impact on the finances of both individuals and lending institutions.

Managing the surge in enquires

In light of these developments, managing the anticipated influx of customer enquiries becomes paramount. Outsource contact centres offer a compelling solution for handling the rise in queries effectively and efficiently. Here’s why:

Scalability – As news of the FCA’s investigation spreads and consumers seek clarification on their vehicle finance agreements, there is likely to be a surge in enquiries. Reputable outsource contact centres can swiftly ramp up their workforce and resources to meet this increased demand without compromising service quality.
Expertise – Established outsource contact centres specialise in customer service and have highly trained advisors who are adept at handling diverse enquiries. Given the complexity of vehicle finance agreements and the potential intricacies involved in explaining the FCA’s investigation findings to consumers, having knowledgeable advisors on hand is crucial. FCA accredited outsourcers, such as ANT, can provide access to experienced professionals who can address customer concerns with accuracy and clarity.
Cost-effectiveness – Outsourcing customer support functions to specialised partners can offer cost savings compared to maintaining an in-house customer service team. With the financial implications of the FCA’s investigation looming large, cost-effectiveness becomes a priority for lending institutions looking to manage expenses while ensuring excellent customer service standards.
Compliance – FCA accredited outsource contact centres are well-versed in regulatory compliance and can ensure that all customer interactions adhere to the relevant guidelines and protocols. In the aftermath of the FCA’s investigation, maintaining compliance with regulatory requirements is essential for lending institutions to rebuild trust and credibility with consumers. The right outsourcers can play a pivotal role in ensuring that all communications are conducted in accordance with regulatory standards.

Choosing the right partner

The FCA’s investigation into hidden, unfair vehicle finance commission has far-reaching implications for both consumers and lending institutions. As the industry braces for potential reimbursement of overcharged interest and increased scrutiny from regulatory authorities, effectively managing customer enquiries becomes imperative. Leveraging the right outsource contact centre partner, with the appropriate FCA accreditations, offers a logical solution to handle the anticipated surge in queries while maintaining service excellence, scalability, expertise, cost-effectiveness and compliance. In navigating the aftermath of the investigation, partnering with a reputable trusted outsourcer could prove instrumental in safeguarding consumer trust and preserving the integrity of the automotive finance sector.