Why management information is crucial to Consumer Duty for lenders and dealers

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As lenders and dealers have worked through the implications of Consumer Duty, it has become clear that compiling accurate and timely management information (MI) will be a crucial component of compliance.

Why? Essentially, proving customer needs are being put first over the longer term can only be achieved by monitoring essential metrics. Therefore, MI will play a key part in showing continuous improvement, providing the data and insights to help better understand how good vehicle buyer outcomes are being delivered and where changes need to be made to ensure continuous improvement.

Basic examples of MI which should be tracked include the volume of rejections, complaints, customer feedback and outcomes of sales reviews – but it’s very much a question of identifying the right metrics for each business involved in motor finance, introducing processes that ensure they are accurately measured and regularly monitored, with clear lines of responsibility being created. 

Looking at lender MI in more detail, a key outcome should be that applications from each target customer base increase while volumes of rejections decline - showing that systems and intermediaries are introducing their products correctly. Also, because they are classed as product manufacturers, lenders will rely on their distribution networks to provide low level MI for each lender finance product including: conversion rates at each stage of the customer journey; data showing testing of consumer product understanding prior to application; accuracy metrics on any consumer soft search algorithms; for rate-for-risk products, MI on the rates initially offered to customers against those accepted by the customer; activity logs showing introducer-declared showroom activities; and product suitability questionnaires to ensure target market conversion and filtration of non-target customers prior to application. The latter is provided by the lender as part of iVendi’s online finance journey.

Dealers will mostly be product distributors, so a key outcome for them will be ensuring they have a fair and transparent panel of lender products to offer to customers, showing compliant processes and value to the end consumer. They will largely be reliant on IT system providers such as iVendi in both the showroom and digital spaces to provide insights that capture and can demonstrate compliant selling across a panel of lenders, including data on market finance rates to ensure dealer offerings remain competitive; and sufficient insight across all their lending partners to produce accurate representative examples.

Tracking Consumer Duty MI could potentially be done manually but, as with any process of this kind, technology will deliver exponentially more effective results with greater accuracy and speed while creating reporting formats that are easy to understand and act upon. We have already been working for some time with motor finance companies and their retailers to put these in place through our Connected Retailing platform. Because of our systems and our experience, this has the added bonus of ensuring not just that the new FCA guidelines are being met but also data protection and consumer rights laws and regulations.  All compliance needs are gathered in one place which, with the increasing levels of sophistication and responsibility in this area, is a genuine advantage for all businesses.

At iVendi, we believe that the more consumers are empowered to self-serve, the better. Assuming a web site serves up everything a consumer needs to know about the finance product they are buying, self-serve is the most direct route to compliance and provides a clear digital paper trail - including crucial management information.

“More and more motor retail web sites and digital marketplaces include finance application processes and that’s the perfect place for them,” said Rob Severs. “If you empower the consumer, if you enable the right journey, and if you’re able to record what they’ve done as part of that journey, then compliance and consistency should follow.” 

How does self-serve work? It provides buyers with the choice, visibility, and relevant information needed to make informed financial decisions with confidence. A self-serve journey should include features such as suitability assessments, informative videos, and the ability to compare multiple finance products from a variety of lenders. This helps consumers find the finance product that meets their individual needs and ultimately empowers them to take control of financial decisions on their own terms.

For retailers, offering consumers the option to self-serve sets a new standard, offering a comprehensive sales solution that aligns completely with the FCA. Automatically creating a full audit trail, it delivers compliance while helping increase profitability through streamlining operations, delivering new efficiencies, following all sales leads to conclusion and powering higher vehicle sales.

For more Consumer Duty insights, you can download iVendi's latest whitepaper "Navigating Consumer Duty Regulations in the Automotive Sector: The Role of Technology in Achieving Compliance and Enhancing Customer Experience" from www.ivendi.com/navigating-consumer-duty