By Debbie McKay, Distribution Director, MotoNovo Finance
The summer’s almost upon us. I think I speak for many of us when I say just how much I’m looking forward to a well-deserved holiday, after what’s been a typically boisterous first half of the year for us motor industry professionals.
However, before we all get too carried away, a crucial deadline is coming up. By the 31st of July, all dealers need to have conducted an annual Consumer Duty health-check, as mandated by the FCA.
In this article, we’ll tell you what needs to be done, why you’ve got to do it, and the potential ramifications of missing the deadline.
Here’s what you need to do
The FCA’s own online guidance (accessible here) is the best port of call, as it breaks down the requirements in handy dropdown menus. I strongly recommend dealers to read it. In summary:
Expectations for monitoring outcomes:
Dealers need to analyse, test, understand and subsequently evidence the sorts of outcomes that customers receive. The breadth of how dealers might conduct this will vary on factors such as the size of the dealership, the types of clients it has, as well as the complexity of the products and services offered.
Board reports:
Consumer Duty requires a dealer’s board (or equivalent governing body) to review and approve an annual report on outcomes received by its customers. Dealers don’t need to send the report to the FCA, however, it must be available should the FCA request to see it. Please refer to the FCA’s online guidance (link above) for a comprehensive indication of what the board report must cover.
The FCA has stated that, naturally, smaller firms will have different capabilities depending on their resources. The FCA has also confirmed that from the 27th of February 2025, firms are no longer required to have a Consumer Duty champion on their board, although dealers can retain the role if they so wish.
Vulnerable customers:
Dealers must be able to identify vulnerable customers, understand their personal needs and meet those needs as much as reasonably possible.
As part of this, dealers must have systems and processes in place that encourage customers to make their individual needs apparent. Staff should also be supported with appropriate training and assistance to identify vulnerable customers, whether they interact with them face-to-face, over the phone or through digital channels.
The deadline for the health-check is, as already mentioned, the 31st of July. Don’t leave it to the last minute; if you haven’t already started the work, get going now as it’s exceedingly unlikely that you’ll be given an extension.
Here’s why you should do it
Every dealer should want customers to wax lyrical about the service they received. To recommend the dealership to friends and family, to leave a glowing review online, and, hopefully, to return as a repeat customer in the future.
Consumer Duty has presented challenges but it’s important to remember why it was introduced in the first place. It’s not designed to penalise; it’s there to ensure that dealers are successful and delivering the best possible outcomes for those they serve.
If dealers embrace the standards set out by Consumer Duty, they’ll be better able to optimise various aspects of their service such as customer support, clear communication, efficient and transparent sales processes and much more besides.
And what about if you forget or choose not to?
The FCA is unequivocal here. Any dealership not adhering to the rules will face severe consequences. The regulator has itself stated that in some cases, they’ll take robust action, such as interventions or investigations, along with possible disciplinary sanctions.
Putting aside the fundamental necessity from a regulatory standpoint, the impacts of not following Consumer Duty outcomes are pretty obvious.
Greater risk of reputational damage, poor online reviews, reduction in repeat business and word of mouth recognition, complaints and potential legal action... The list goes on.
Consumer duty adherence isn’t an optional nice-to-have. It’s absolutely essential; the dealers who continue to embrace it and prioritise good customer outcomes are the ones who’ll be most successful.
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