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Motor finance companies need to be working now with vehicle retailers and technology providers to create uniformity across all channels through which their products are sold in line with new FCA regulations, says iVendi.

The online motor retail specialist reports that many appear to be concentrating on ensuring the compliance of their own captive showroom systems without confirming that third party platforms and other routes to market also meet requirements.

James Tew, CEO, said: “Key among the FCA changes are the banning of discretionary commission and the question of how commission should be handled in the future. Because so many physical and online channels are used by motor finance companies and their intermediaries, this creates something of a challenge.

James Tew, CEO, iVendi. Image: Ginger Pixie Photography

“Certainly, from our point of view, as a provider of technology that is used to generate and process thousands of motor finance applications online and also in the showroom every week, we are very much aware that everyone needs to be working together to generate progress in this area right now.

“The FCA’s January deadline is only a few months away and more uniform processes and disclosures may prove to be a much more difficult task than first imagined. Lenders have different commission models across their product ranges and as such the ‘nature’ of these – to use an FCA term – needs to be disclosed against each of them.”

“Also, increasing the prominence of the availability of commission will most likely require changes to the online finance journey presented by retailers using products such as ours and ensuring that everything is compliant on the day the regulations come into effect is very much a priority for us.”

James said there remained grey areas that needed to be resolved in how the FCA regulations would be operated by motor finance companies.

“This especially applies to the ‘nature’ of commission disclosed, in the FCA’s phrase. There is some debate over exactly how this should be interpreted. The finance companies with which we are in dialogue often have different views. As virtually every dealer works with multiple lenders, this needs to be managed by both dealers and system providers to cater for their digital and analogue processes. Of course, there can be more than one interpretation but each needs to be justifiable.”

“With each lender operating multiple commission models against their range of products and retailers working with multiple lenders, there’s certainly going to be plenty of housekeeping of this type that needs to be addressed. It is a question of coming together to arrive at forms of wording that are honest and compliant, and can be easily understood by motor finance customers.”

James added that the forthcoming changes to commission had been clearly signposted by the FCA and iVendi had been working towards compliance for some time.

“We’ve been looking closely for a while at how our own products will operate within the new regulations and we believe that, whatever route dealers choose towards meeting them, we can now align our systems to match.”

“Because we are FCA authorised ourselves, we are able to bring a high degree of insight to the whole issue. Our fundamental approach is to ensure the customer is placed at the centre of the entire process, with a high level of transparency and information provided, to meet the general TCF principles in letter and spirit.”

In 2020, iVendi has launched a completely new three product range for all vehicle retailers from small dealers to multi-national businesses. ENGAGE is designed to help customers find a vehicle, CONVERT to facilitate the process of transforming initial online consumer interest into sale and TRANSACT to shape the final transaction. Together, the three products form a comprehensive online motor retail journey using the latest technology and innovative thinking in this crucial area. 

James Tew, CEO at iVendi, said: “While the coronavirus crisis has obviously affected our roll-out of the ENGAGE, CONVERT, TRANSACT range, the products have been very well received. What is interesting is that, because they were all developed to be used for online or showroom vehicle buying processes, or a mix of the two, they are extremely well-suited for the kinds of retail models that dealers have developed for the new normal.”