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Nearly three-quarters of customers are not told about the Financial Services Authority regulations governing finance sales when they buy a new car.
Buyers are not fully informed
A study by FSA Automotive claimed 72 per cent of customers had no recollection of sales staff mentioning FSA procedures when they bought a car from the group – which did not wish to be named.
FSA Automotive’s technical director Tony Hodder said: “More surprising was that only customers who had signed demands and needs statements were contacted.
“I am sure the dealers in question thought they could prove compliance but this practice is not treating customers fairly, which is one of the FSA’s biggest priorities for motor retailers.”
Customers not treated fairly
Hodder said the findings showed that in the majority of cases “sales people are just going through the motions to appease managers who in light of recent actions from the FSA are applying pressure for signed statements in deal files”.“Many dealers are missing an opportunity to recommend further products to the customer. Additional products could add £600 to each deal, during March especially.That could have a huge impact on any business’s bottom line,” Hodder added.
Since January 2005 it has been illegal for dealers to sell insurance products such as finance payment protection, Gap insurance and warranties without complying with FSA regulations.
FSA Rap
Last month the FSA imposed a public censure on Cathedral Motor Company over failures regarding the sale of payment protection insurance.The Midlands group, with four sites under the Arbury name, was ticked off for failing to organise and control its regulated business responsibly and effectively.FSA director for enforcement Margaret Cole said: “The sale of PPI is a priority for us due to the high potential risk for consumers in the way this product is sold and we are determined to see much better practice in this area.
“This is the second enforcement action we have taken against a car dealer in connection with PPI sold on vehicle finance agreements.”