Unprepared car retailers could be “heading for a fall” if they do not act fast to ready their businesses for 2023’s ramp-up in compliance challenges, it has been claimed.
A recent webinar hosted by Keyloop, in partnership with AM, highlighted a lack of awareness of Financial Conduct Authority’s Consumer Duty regulations set to come in to force on July 31, 2022, well over a month after car retailers were alerted to an October 31 deadline to come up with a compliance plan.
Now Jon Rix, who is a director of The Compliance Guys alongside his business partner Nick McDonald, has renewed the call for awareness and action across the sector.
“Next year people are going to be heading for a fall,” said Rix. “The Consumer Duty implementation needs to be in place before July, but how many car dealers are ready, and what processes or systems have they put in place to manage the compliance requirements and evidence everything?
“Lenders are taking this very seriously and will be checking that dealers are abiding by the rules and they are at risk if that’s not the case. We don’t like to scare people but a very real risk to dealers is having their lender facilities removed abruptly in July.
“I bet about 90% of dealers still haven’t got their Consumer Duty implementation plan in place. Its madness not to start looking at this now.”
Former AM News Show podcast guest Charlotte Morgan, chair of Keyloop’s recent Building a Case for Legislative Advocacy webinar – which can be viewed on-demand here – asked delegates ‘How much of an impact has the new consumer duty had on your business?’
In response, 23% asked ‘What is the Consumer Duty?’, with 7% admitting they had taken no action to meet their compliance obligations.
The FCA announced back in July that it would be shifting its expectations of finance firms and dealers from the old “treating customers fairly” principle to now an adage of “put their customers’ needs first” through the implementation of the Consumer Duty.
The new Consumer Duty is being rolled-out in a bit to ” fundamentally improve how firms serve customers” as the financial watchdog continues a transformation to become “a more assertive and data-led regulator”.
The Compliance Guys also sought to highlight social media as an area of FCA compliance that might be overlooked by car retailers now scrambling to meet the new rules.
Rix said: “Another focus from the FCA is Financial Promotions, the dealership could have the headache of having to contact every single customer who may have been mis-sold a vehicle due to misleading advertising on their website and social media platforms, including Facebook, Instagram and Tik Tok.
“They could then have to provide a refund if it’s evidenced that any of their financial promotions were inaccurate or misleading.”