Alphera’s seven tips to get your F&I team FCA ready

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In this article: The Financial Conduct Authority has banned discretionary commission models from 2021, so businesses need to start making changes. Alphera’s director Spencer Halil gives his advice on how to get your F&I teams ready.

The Financial Conduct Authority’s (FCA) final ruling from its motor review is in and a ban on discretionary commission models is coming from the beginning of next year.

The industry will need to work hard to make sure that businesses are ready to meet the new rules that come into force from the 28th January, and there’s little reason to wait to begin the process, a point highlighted by Alphera’s director Spencer Halil.

“There is plenty we can do to begin implementing necessary changes, and start to look at how we, as lenders, incentivise F&I salespeople and brokers to act in customers’ best interests,” he says.

Alphera is already in discussions with partners on how to address the FCA’s requirements and other business should be doing the same. There may be six months to implement changes, but Halil says the sooner dealers start getting ready the better. Here are the seven points he says you need to prioritise now:

  1. Make sure your salespeople understand the need to properly disclose the existence and nature of commission, and the need to do that early enough in the process. Don’t wait until 28 January 2021 to do this – it takes a long time to change processes.
  2. Continue to embrace digital sales, even though your physical dealership might now be open again. The adoption of e-retailing and e-sign platforms makes it easier to follow a compliant sales process and evidence that customers have received the appropriate information.
  3. Make sure your documentation is properly up-to-date and doesn’t simply bury disclosure statements in the adequate explanations’ documents or initial disclosure statements, which are held online but seldom read.
  4. If you haven’t already, talk to lenders about their remuneration schemes because those will need to change if there is currently any discretionary element around commission. Remember, these changes will take a number of months to bed in.
  5. Don’t forget the Senior Managers and Certification Regime. Senior managers need to be fully informed as the FCA will expect them to be your front line. What are you doing to make sure senior managers have kept their knowledge of compliance up-to-date during lockdown?
  6. Consider enrolling employees in the IMI’s F&I Accreditation scheme as a means of ensuring salespeople stay competent. As an official training centre, Alphera will be updating its training that delivers this accreditation pathway – principally around commission disclosure requirements.
  7. Making sure that sales processes follow new FCA requirements is a shared industry responsibility, and lenders need to take reasonable steps to make sure its agents remain compliant.

Want more information on F&I accreditation, head to the IMI’s website or contact the institute’s Business Development team on 01992 511 521.