Fred Crawley finds decisive action being taken by
finance providers, dealer partners and the FLA ahead of 1 February
2011 deadline.
Go deeper with GlobalData
Motor finance providers and their
dealer partners are taking decisive action to prepare themselves
for the implementation of the Consumer Credit Directive, which
comes into force in the UK on 1 February next year.
The Finance and Leasing Association
(FLA) has reacted to the incoming changes by expanding its
Specialist Automotive Finance (SAF) competence test for dealers and
finance providers.
The extended test adds 15 questions
to its previous roster of 45, and will remain in place for 12
months, after which the standard SAF test will be reintroduced.
FLA head of motor finance Paul
Harrison said: “Although most lenders will be introducing their own
CCD training for their unique processes, we hope our SAF test will
be a useful starting point for industry-wide CCD compliance.”
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By GlobalDataCurrently, more than 500 motor
retailers have been approved with the SAF kitemark, including 5 of
the top 10 dealer groups in the UK.
Of the remainder, Harrison said the
FLA was in talks with Pendragon, Arnold Clark, Inchcape and
Sytners, with the hope that Pendragon would be approved by early
2011.
Lenders are making their own
preparations for the scheme.
Point of sale market leader Black
Horse has set in motion a large scale training programme to help
its dealers prepare for the changes to come, with a mind to
implementing alterations to its own processes by 25 November.
According to the company, it has
already put its entire field sales team through training, and is
spending the month of October rolling out on-site training for its
network of dealers, aimed at incorporating CCD processes into
existing FSA training.
Managing director Chris Sutton
said: “We have taken great care, when interpreting the new
legislation, to consider the impact it will have on our
dealers.
“Our aim is to help them overcome
some of the complexities of the new legislation by helping them to
embed it within their own sale processes.”
Sutton said that although he was
sure the CCS would “have a significant impact” on the sales
process, he was confident that the impact of the new regulation
would “boost consumer confidence”, helping to build “even greater
trust at the point of sale”.
NIIB motor finance arm Northridge
Finance is planning to implement its own changes on 1 November.
It is conducting a series of
roadshows for dealers in England, Scotland and Northern Ireland,
aimed at giving dealers an idea of Northridge’s views on CCD and
how it will change the process of selling motor finance. It then
plans to follow these up with tailored face to face sessions with
supporting dealers.
“CCD represents a major change for
us and dealers alike with adjustments to pre-contract information,”
said Northridge sales and marketing director Alan Carson.
“Examples of other changes include
customers’ rights to withdraw from agreements and partial
settlement.”
The component of CCD causing most
concern for finance providers is the granting to consumers of the
right to withdraw from credit agreements within 14 days of entering
into them, without giving any reason for doing so.
However, there is a case for
optimism here – Germany implemented CCD around a year ago, and car
finance providers there have stated anecdotally there has been “no
significant increase” in consumer withdrawals since.
Another of the regulatory
requirements incurred by CCD that will prove challenging to both
dealers and finance companies will be the requirement for “adequate
explanation” of credit products to be provided to consumers “in
good time” before any contract is signed, either orally or in
writing.
According to John Perez, partner
and head of finance litigation at Chafes Solicitors, there is some
ambiguity in the legislation regarding who in the sales chain is
responsible for providing this explanation, be it finance provider,
dealer or broker (if involved).
His advice is for finance providers
to take on the obligation themselves, and make sure that consumers
are provided with a written version of the information required at
the same time as the pre-contract information and draft agreement
are generated during the sales process.
“This is the safest bet, since it
allows a finance house to be sure that the information is being
provided”, Perez said.
He also acknowledged that the requirement incurred a danger of
slowing down the sales process if not handled efficiently by
finance providers.
See also: Changes ahead: John Perez of Chafes
Solicitors considers the implications
