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With a press release titled; 'FCA to introduce new Consumer Duty to drive a fundamental shift in industry mindset' issued on December 7th, the Financial Conduct Authority made it very clear that it is expecting significant change to ensure financial credit markets work well for borrowers as it gears up for the introduction of the new Consumer Duty.

With the FCA noting that; 'We would generally expect firms with a direct relationship with the end-user to have the greatest responsibility under the Consumer Duty;' dealers need to consider how well their existing model embraces the outcomes sought by the FCA. These are the governance of products and services, price and value, consumer understanding and consumer support.

Over almost 200 pages, the FCA plan, which is subject to consultation until February 15th 2022, outlines the background of its expectations and draft handbook guidance for new rules, which are expected to be finalised by the end of July 2022.

For dealers, their board or equivalent management bodies will be responsible for assessing whether it places consumers' interests at the heart of their activities to deliver the type of good customer outcomes the regulator expects. For this reason alone, we can expect to see much more about the new Consumer Duty in the months ahead. Once again, when facing regulatory change, dealers can rely upon MotoNovo to be taking the lead in supporting them. 

The challenge of change always presents opportunities. Overall, embracing consumer credit regulation has been a positive force for dealer finance. The picture over recent years has been one of improving performances, a more significant role for finance in marketing and pricing and crucially enhanced consumer confidence.

The proposed Consumer Duty focuses squarely on ensuring consumer credit providers, including dealer finance, place each customer's interests at the heart of the experience, products, and pricing, rather than the business'. The attention to delivering good customer outcomes is not new. When the Consumer Duty was first announced last May while recognising that ‘many firms that are already delivering the right outcomes for consumers – good products and services at fair prices,’ they also noted that;

‘We also encounter too many firms that are not adequately considering the needs of their customers and prioritising good consumer outcomes as an objective of their business activities. We continue to see practices that cause consumer harm.’

Creating good outcomes for customers at an individual level was why we pursued the development of our risk-based pricing model and its tailored approach. Standing largely alone in taking the lead with risk-based pricing was centred upon embracing the FCA to place customer need at the heart of finance. We continue to provide flat-rate pricing models, but in light of the FCA's work, it feels appropriate to share our findings from MotoRate.

It is improving dealers' finance penetration, and consumers' feedback continues to be exceptionally good.

Adopting risk-based pricing does require- some different thinking by dealers and I believe that is what the regulator's press release suggests they are seeking. I welcome the opportunities to discuss our learnings from this innovation with dealers as the Consumer Duty changes approach.

Press release issued by MotoNovo Finance, January 2022


With the FCA set to introduce a new Consumer Duty later this year, hear from Managing Director, Karl Werner, on what this means for the industry.

FCA's forthcoming Consumer Duty

As we look forward to 2022, the now-familiar reality of the global pandemic is dominating headlines. As I write this, the World Health Organisation is warning countries to prepare for potential new surges connected to the Omicron variant. It is an unwelcome but not entirely unexpected addition to our planning to which we must adapt. While we cannot fully anticipate Omicron’s impact, there is some clarity in other areas that can help plan for the year ahead.

The Organisation for Economic Co-operation and Development (OECD) has cut its growth forecast for the U.K. next year to 4.9% from 5.2%, but that is still the fastest in the G-7 group of companies.

Inflation is forecast to peak at close to 5% by the middle of next year before returning to the <2% target level by the end of 2023.

Wholesale money costs rose during December ahead of the Bank Rate increase as the Bank of England seeks to stem rising inflation.

We look set to enter an economic phase that will never have been seen by some people, rising inflation and potentially rising interest rates. Positively, forecasts see things being brought under control over the year ahead.

The SMMT’s most recent data forecasts new cars registrations at 1.958 million, an increase by 17.8% on the 2021 outlook.

Electric and hybrid variants will dominate new car sales, but these will take time to feed into the used marketplace. Supply forecasts suggest that buyers can continue to expect significant order time for some vehicles; a six month wait is not unusual.

The continuing pipeline challenges and low new vehicle sales during much of the last two will continue to create supply pressure for the used vehicle market. Depending upon consumer demand, it seems unlikely that there will be any dramatic price realignment in the coming months. Still, I wonder if the price elasticity for used cars has met its limit.

Environmental, Social, and Governance (ESG)

Something new for this year’s outlook. I fully expect the abbreviation ESG to become mainstream in 2022. The investment community is looking increasingly to non-financial attributes when making investment decisions to identify risks and opportunities.

While there may be a financial imperative to ESG, the moral and reputational attributes should be driving a focus on increasingly essential issues; how businesses operate will come under closer scrutiny, and we can see this reality in areas such as planned financial regulation.

2022 will be another year where regulatory changes will be front and centre. The FCA is expected to publish the findings of its supervisory work assess the ban on discretionary commission’s impact. Alongside this, it also plans to introduce a new Consumer Duty in July to set more explicit and higher expectations for firms’ standards of care towards consumers.

The Consumer Duty would require firms to:

ask themselves what outcomes consumers should be able to expect from their products and services

act to enable rather than hinder these outcomes

assess the effectiveness of their actions

While the FCA is happy with the approach of many firms, it is concerned that; “too many firms that are not adequately considering the needs of their customers and prioritising good consumer outcomes as an objective of their business activities.”

Planning for the year ahead, a word that constantly comes to my mind is ‘transition’.

A need to transition out of a pandemic and much of the unusual trading conditions that followed.

A need to enable and lead the transition to EV and alternative fuels and a lastly to continue the journey we’ve been on to better support and serve our customers, dealers and intermediaries.

Knowing the ambitions and plans MotoNovo and the Aldermore Group have to move forward in 2022, I’m very much looking forward to the year ahead.


As we welcome in a new year, Managing Director, Karl Werner, is setting out his predictions for the year ahead.

2022 outlook

I read an  article recently published in the US centred upon the role of transparency in enhancing motor (or rather auto) dealer profitability over the last year. It got me thinking, to what extent have the circumstances of the last year influenced profitability and has transparency been one of them? I welcome feedback from the dealer community on this issue.

The call for greater transparency for consumers in car buying and financing has been increasing in recent years. Both regulatory and social changes have contributed to this call for change to de-mystify the entire process. The suggestion from the US is that transparency has been increasing and it has been positive for the bottom line.

With consumers unable to visit showrooms and check out the car in detail, dealers reacted by leveraging every tool at their disposal to provide information. Videos of all angles of a used car with dealers happily highlighting any areas of minor damage. In part, it could be argued that this was to minimise the risk of people returning a vehicle for distance selling reasons. Indeed, this would be an astute approach, but the added benefit was that such transparency engendered trust.

Video transparency has had other benefits. Dealers asked consumers to reciprocate in providing accurate imagery for their part-exchanges, highlighting any damage. Again, this deepened the bond of trust, led to more accurate valuations and improved the quality of dialogue. It also helped to provide a springboard for discussion about other added-value services such as Smart insurance.

Overall, the quality of this transparency did not impair sales; it enhanced the processes for dealers and customers. While there was a genuine concern that the required move to distance-selling would result in a high level of vehicle returns, the broader picture is that this did not happen in any significant volume. Instead, feedback and reviews have been very positive – customers and dealers are beginning to trust each other much more.

The US experience also points to pricing transparency; overall, customers did not rush to find a cheaper deal elsewhere when given definitive pricing information. Instead, armed with a complete picture of the car and pricing and the ability to make a buying decision at their leisure, customers made their buying decision centred on confidence and trust. The article also references the positive penetration and profit benefits of transparency in F&I.

The F&I landscape in the USA is different to the UK and the ban on discretionary commission that came in during the last year. Nevertheless, none of us should ignore the benefits of transparency that have been seen, nor should it be feared. It seems that putting information in plain sight is an opportunity, not a threat.

The reality is that the ‘genie is out of the box.’ Consumers will want to maintain the transparency trend. Then again, if, as it seems, it enhances dealer profitability, then it is a tremendous win-win position.

All feedback on your experiences welcome.

With the call for greater transparency for consumers in car buying and financing increasing over the past few years, what impact can it have on business and profitability? Find out from Managing Director, Karl Werner. 

News - 2022

FCA's forthcoming Consumer Duty

2022 outlook

How transparency can boost customer trust

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