By Gerry Kouris, Marketing Manager at ALPHERA Financial Services
The FCA’s recent comments on motor finance, and PCP in particular, have been encouraging. Speaking at recent consumer finance event, Jonathan Davidson, Director of Supervision – Retail and Authorisations at the FCA, commented that the growth of PCP contracts in the motor finance market is a “good example of an innovation that has had a significant impact,” and that this type of innovation “paints a really attractive picture” of the motor industry.
This positive outlook is certainly consistent with our view of the industry, as I’m sure it will be for every finance provider that believes in the robustness of their products and puts ‘treating customers fairly’ at the heart of their operations.
However, in its recently published 2018 Business Plan, the FCA reiterated the fact that it will be undertaking further work on responsible lending, particularly the approach taken by motor finance lenders to assessing creditworthiness, including affordability. It’s imperative, therefore, that we challenge ourselves to do better, helping dealers to match the right product to the right person every time. For many dealers, this will involve business model diversity – looking at new ways to ‘innovate’ and secure outcomes that are positive for them and, importantly, their customers.
We see innovation and change as two sides of the same coin. ‘Innovation’ is a trendy word with which companies of all shapes and sizes often try to associate themselves. But innovation can also refer to changing existing company practices, as much as it does to inventing something completely new. This type of cultural innovation, however, can be less popular and often faces greater resistance.
That’s because making impactful changes to business culture often isn’t easy. But as Jonathan Davidson at the FCA alluded to in his speech, a successful business model relies on having a healthy culture, where staff are encouraged to be curious and questioning.
This is whyAlphera has established a partnership with the Institute of the Motor Industry to promote the uptake of a new accreditation scheme for finance and insurance sales specialists. The scheme provides a platform for self-regulation to support compliance, introducing shared core values across dealerships.
This type of innovation is more than simply complying with a regulator’s demands. But rather an opportunity to instil the culture and expertise needed to make ‘treating customers fairly’ a core value for everyone in the business of selling cars.