It is now well over 18 months since consumer credit regulation became the responsibility of the Financial Conduct Authority (FCA), taking over as we know from the Office of Fair Trading (OFT).
At DSG we, along with many other firms, started preparing for this a long before the changeover date last April. This now seems like a long time ago, and a good time to reflect on how the changes have impacted on how we work. We have made changes to our business in order to evolve and to meet current expectations of both ourselves and our motor dealer partners.
This is an overview of some examples of how we have gone about this.
DSG made ‘soft search’ technology available to our motor dealer partners much earlier than the advent of FCA regulation. Building on our own in house technology, PREview was made available to our supporting accounts for use themselves, free of charge. Dealerships making use of this are able to pre-screen their customers without leaving a full credit search on the customer’s file.
This brings two major advantages. Firstly, customer’s expectations can be managed.
PREview allows dealerships to set clearer levels of expectation with the customer – before signing the order form. By entering some brief customer details, dealerships are able to carry out a ‘quotation search’ (or soft search) that will identify what credit terms the customer will potentially go on to qualify for.
In addition, there is a direct link to specific FCA guidance ensuring that customer’s credit profiles are protected – a search should not be made on a credit file unless the customer is ready to apply. Use of PREview allows us and our dealerships to ensure this is supported, carrying out a soft search on the customer can give clear indications of where, or where not, a customer’s application for credit should go. This leads to improved customer outcomes, which is central to our business.
Electronic signature (eSign)
DSG is the first motor finance broker in the UK to launch eSign, in other words, the ability for our customers, and the customers of our motor dealer partners to sign their credit agreements electronically without the need for paperwork and the associated customer proofs.
This provides a clear benefit to all of the parties involved.
For our customers, they are able to either sign their agreements at home or in the dealership. DSG’s eSign platform supports both sign up possibilities. In both cases, the customer is assisted through the signing process with clear explanations provided where needed. This allows the customer the time and suitable environment they need to make an informed choice regarding their proposed agreement, with help available if needed either in the showroom, or via DSG when the customer signs away from the dealership.
So, the customer has the benefit of viewing and signing their agreement in their own time without any external pressures, but there are far more benefits.
The need for paper based “proofs” is largely removed, this is because customer identity and counter fraud checks are carried out in the background as part of the eSign process. As eSign develops and more dealerships make use of the technology offered by DSG, there will be less and less need for scanning, emailing and faxing paper proofs. This speeds up the process and leaves the dealership less exposed to the risk of handling customers’ documents.
Simplified funder packages which can fit seamlessly around the manufacturer’s terms
Now, more than ever, our industry is under the spotlight to ensure that customers are treated fairly (TCF is I’m sure branded in the mind set of us all in the current regulatory environment).
DSG ensures that this is supported by offering clear, simplified funder packages which ensure transparency in terms of the APR charged to the customer.
Dealerships clearly have to be able to choose at what rates they want to set their finance options, there remains the need for our partners to ensure that they set their rates in a consistent manner regarding their own in house manufacturer terms.
We support this by being able to set bespoke rates based on the dealership’s needs. In this way, customers are treated in a consistent manner with set rates should they not qualify for first string lender terms.
We recognise that customers can be vulnerable for many reasons and they need additional support from us. We welcomed the FCA “challenge to firms” issued in February of this year whereby firms were asked to look at how they ensure that customers in a vulnerable position are supported.
As such, we have devised a new policy which is supported by detailed, bespoke in house training in this area. This is complimented by the inclusion into our monitoring activity of issues related to vulnerability. This provides us with confidence in terms of our processes in this area – staff are clear what our policy is, they are then trained on how to apply it, and we monitor that this is in fact taking place
Internal auditing & monitoring
Finally, whilst we fully committed to supporting both our lender and motor dealer partners, we are very much aware of the need for us to ensure that we get things right within our own business.
In this regard, we have introduced what we believe to be one of the most stringent internal monitoring processes to ensure that our people are acting in our customer’s interests.
Our detailed compliance & quality monitoring programme takes a percentage of finance agreements entered into by our customers and then analyses each action taken across our business. By way of summary, factors looked at include:
- Underwriting performance – was the customer placed correctly
- Were all legal formalities followed and were customers provided with the correct documentation at the right time
- Is there any evidence of customer vulnerability, and if so was this dealt with in the correct manner
- Were any money laundering or fraud risks identified and reported
- Was the customer assisted correctly where this was needed
- Did our staff act professionally and courteously
This provides merely a brief summary of the total checks carried out as part of this process. We are confident that the in depth and detailed approach we take to our internal monitoring activities will support not only our business, but our partner businesses as well as the customer.
Along with many others in our industry, we recognise that compliance must form part of our long term strategy, as such we continue to work to ensure that we exceed both the current and future expectations of us as an authorised firm.