10 Top Tips for Embracing the New Consumer Duty Rules
The Consumer Duty is a new set of rules that came into effect in the UK at the end of July 2023, and apply to a wide range of financial services firms, including motor dealers.
The Consumer Duty is designed to improve consumer protection by setting higher standards for how firms interact with their customers. It will require firms to put the customer at the heart of their business and to act to deliver good outcomes for them, ensuring product transparency and fair value, especially when it comes to motor finance.
Motor dealers will need to make sure that they are visibly adhering to Consumer Duty from 31st July 2023. Here are 10 top tips to keep your dealership on top of the rules:
1. Understand the Consumer Duty.
The first step is to understand and familiarise yourself with what the Consumer Duty is and what it means for your business. Be sure to review the regulatory guidelines, obligations, and key provisions to ensure compliance. You can find more information on the FCA website.
2. Assess your current compliance.
Once you understand the Consumer Duty, you need to perform a comprehensive audit of your current compliance and assess existing processes and procedures. This will help you to identify any areas where you need to make improvements to meet the requirements.
3. Put in place a compliance plan.
Once you have assessed your current compliance, you need to ensure you have a compliance plan in place. This sets out how you will meet the requirements of the Consumer Duty and this needs to be shared with all staff.
4.Provide appropriate staff training.
Your staff need to be aware of the Consumer Duty and how it affects their work. You should provide them with appropriate training on the new rules and make sure they are able to provide accurate and easy-to-understand information about all motor finance products, services and pricing. Ensure your sales team are clear on the importance of ethical sales practices and that they avoid any misleading or information high-pressure sales tactics.
5. Gather evidence of compliance.
You need to continually gather relevant evidence to demonstrate that you are complying with the Consumer Duty. This evidence includes policies, procedures, and training records and must be easily accessible.
6. Review your compliance plan regularly.
Your compliance plan should be reviewed regularly to ensure that it is still fit for purpose. This includes carefully reviewing your terms and conditions to ensure they align with the Consumer Duty and making any adjustments to eliminate any unfair terms and conditions.
7. Enhance customer communications.
One of the core principles of Consumer Duty is clear and transparent communication with your customers. You need to be transparent with your customers about the car finance options you have available, clearly outlining terms and conditions, interest rates, monthly payments and potential risks. Ensure you provide them with clear information about your policies and procedures and how you are complying with the Consumer Duty.
8. Be prepared to respond to complaints.
Customers will have the right to complain if they feel that you have not met the requirements of the Consumer Duty. In preparation you should review and enhance your complaint handling procedures to be more efficient and customer centric. You need to be prepared to respond to complaints in a timely and fair manner and demonstrate your commitment to resolving any customer issues promptly and fairly.
9. Ensure data protection and privacy.
The Consumer Duty puts emphasis on fair treatment and data protection, so it is essential to safeguard customer data and privacy. You should review how you handle customer data, your data security measures and be sure to update your policies accordingly.
10. Seek professional advice.
If you’re unsure about any aspect of the Consumer Duty or how it may impact your business, don’t hesitate to seek professional advice. Consult industry specialists to stay ahead of the changes and remain compliant.
The Consumer Duty is not just about meeting the minimum requirements. It is also about going above and beyond for your customers. You should be proactive in your approach to compliance and constantly looking for ways to improve the way you interact with your customers.
For instance, other things you could consider whilst getting ready for the Consumer Duty:
- Set up a dedicated team to oversee compliance with the Consumer Duty.
- Invest in technology that can help you to track and manage your compliance.
The Consumer Duty is a significant change for the financial services industry. However, it is an opportunity for motor dealers to embrace improvements to their customer service to deliver better outcomes for customers. By following the tips above, you can make sure that you are ready for the new rules and that you are able to continue to provide excellent customer service.
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