Car retailers in the UK are experiencing a significant transformation in their operations with the introduction of the Consumer Duty. This regulation, issued by the Financial Conduct Authority (FCA), places a renewed emphasis on delivering positive consumer outcomes in the automotive retail sector.

The Consumer Duty is not a one-off event but an ongoing commitment that demands car retailers prioritize their customers' interests at all stages of their operations. This cultural shift requires firms to embrace a customer-centric approach, from the boardroom to the showroom floor.

Car retailers that have successfully transitioned have aligned their organizational purpose and values with the goal of delivering outstanding consumer outcomes. They have also updated their internal training and cultural materials to reflect this newfound focus. Some have even restructured their reward and incentive systems to support the effective delivery of the Consumer Duty.

Compliance with the Consumer Duty necessitates continuous assessment, testing, and the gathering of data to understand consumer outcomes. Repackaging existing data is not sufficient; firms must delve deep to uncover the information required to comprehensively comprehend consumer outcomes.

For car retailers, monitoring the experiences of different consumer groups, especially those in vulnerable circumstances, is essential. Firms that fail to do so will need to make more significant efforts to meet the Duty's expectations.

Each year, car retailers must submit their Consumer Duty assessment to the board or equivalent governing body. This assessment should encompass the results of monitoring to ensure that products and services meet the expected outcomes outlined in the Duty. Evidence of poor outcomes must be addressed promptly.

In cases of poor outcomes, car retailers must take the necessary steps to rectify the causes. This could involve changes to communication strategies or adjustments to products and services, all in the spirit of continuous learning and improvement.

The next major milestone for car retailers is the implementation deadline for closed products and services, scheduled for July 31, 2024. While some aspects of the Consumer Duty will apply differently to closed products, the core principles remain pertinent. Firms must remain attentive to whether closed products and services could potentially harm consumers or obstruct their financial objectives.

Preparation for this deadline is critical, and car retailers are encouraged to proactively ensure compliance to smoothen the transition.

The FCA is committed to making the Consumer Duty an integral part of its regulatory approach in the automotive retail sector. The Duty has already allowed the FCA to intervene in markets swiftly and take robust actions when consumer outcomes are not up to par. The FCA will continue to collaborate with car retailers, testing the implementation and embedding of the Duty.

The FCA will also address sector-specific concerns, such as claims processing efficiency and fair value in consumer finance within the automotive sector. Furthermore, the FCA aims to resolve issues that consumers encounter across multiple sectors, ensuring car retailers provide consistent and reliable support.

The introduction of the Consumer Duty signifies a profound change in the regulatory landscape for car retailers. Embracing this change and adequately preparing for it will position car retailers for success in the evolving automotive retail market. Compliance is about more than meeting regulatory requirements; it's about delivering better outcomes for consumers and building trust.

Car retailers can turn to the NFDA for guidance, support, and resources as they navigate this ever-changing regulatory landscape. The NFDA's Finance & Insurance group collaborates closely with the FCA to provide businesses with the tools needed for compliance, including guidance documents, implementation plans, SWOT analysis, and GAP analysis. For car retailers seeking assistance or further discussions on implementing the Consumer Duty, please contact NFDA head of operations Symon Cook at symon.cook@rmif.co.uk.

Source: FCA, find the full article HERE.