The FCA is also exploring whether there are conflicts of interest at the point of sale, where staff are incentivised to sell a finance product regardless of whether a good customer outcome is achieved or not.
Below, we set out key considerations for good practice in this area.
Customer information
The sales process should be driven by the information provided by customers. This would typically start with asking some basic questions about their circumstances:
- Would you like to own the vehicle at the end of the agreement, or just use it and hand it back?
- Is it for business or personal use?
- What can you afford?
- How long would you like the term of the agreement to last?
Product understanding
The differences between products and their features should be explained clearly:
- Does the customer understand what happens over the life of the agreement, including their options at the end?
- Does the customer understand the features of the product, such as a balloon payment, the spread of the payments, mileage allowance and interest?
- Are all of the standard fees explained, including any charges applied if mileage is exceeded or the car is damaged?
Financial quotes
Cost estimates of each available financial product should be provided, alongside explanations of key features such as how monthly repayments, the APR and any balloon payment are calculated.