E-commerce solutions provider iVendi is warning that car dealers could risk damaging long-term relationships with customers if they fail to handle the Financial Conduct Authority-mandated affordability test sensitively.
The new FCA regulation is likely to require more detailed information about customers’ personal finances than existing motor finance applications. This has led to fears that the inevitable questions around income or the personal changes in circumstance might make customers uncomfortable.
James Tew, chief executive of iVendi, acknowledged the fact that in-depth financial questioning would be a new area for dealers: “It is unlikely that your motor finance provider has been using an application process that employs anything other than fairly blunt criteria designed to assess whether a potential customer can actually afford the car that they want. Filling in the average application form has generally taken a matter of minutes.”
Tew described how under the new regulation, the application process is set to become more sophisticated as it is designed to determine whether the customer can sensibly afford the payments on a vehicle and repayment option of choice. As such, he explained, dealers must be aware of the higher degree of sensitivity required if they are to maintain productive long-term relationships with customers.
