The National Franchised Dealers Association (NFDA) is urging its motor retailer members to get in touch if they need additional support ahead of the new Consumer Duty regulations that launch on July 31.

The Financial Conduct Authority (FCA) intends for the new Duty to increase levels of consumer protection in retail financial services markets, while aiming to promote a healthy environment for firms to thrive.

The NFDA said the Duty will not be a tick-box exercise or be about introducing new processes and paperwork but about a cultural change within FCA regulated firms.

This means that motor retailers need to take action to ensure they are compliant with the new Duty.

The NFDA runs an finance & insurance group for its members and said it is working closely with the FCA to ensure businesses are well equipped and prepared for the enhanced changes to the Duty.

What does the Duty mean for motor retailers?

The Consumer Duty is about cultural change in firms that puts the customer at the heart of the business.

It will build on the existing ‘Treating Customers Fairly’ principle, but it will be far more wide reaching and encompassing.

The cross-cutting rules are high level and not specific, allowing for interpretation and flexibility in how individual firms implement them. The overall focus will be on what an individual customer needs and wants. It will be about ensuring:

  • The products sold are fit for purpose and meet their needs.
  • Customers have all the information they need, in a format they can understand and digest, to make an informed decision when buying a financial product.
  • Customers believe the product they are buying is good value and at a fair price for them.
  • Customers have free access to support before, during and after their purchase.

The Consumer Duty will require retailers to evidence that their customers are receiving good outcomes and they are taking steps to achieve this.

It will also require retailers to detail their negotiations with lenders and insurers about product design and suitability; ensure deal files are completed showing that customers have received and understood the information given to them; and to document reasoning for pricing structures. Staff training will also be key to ensuring retailers have the skills to ensure they are delivering what the Duty requires and consumers need.

Sue Robinson (pictured), chief executive of the NFDA, said: “With your NFDA Membership, franchised dealers are offered the correct support and guidance through this transitionary period, ensuring that retailers are regulatory compliant.

"NFDA offers structured guidance, implementation plans, SWOT analysis and GAP analysis to support retailers’ appointed representation.

“If your appointed representation would like to receive or discuss any of the documents, or require assistance with the new Consumer Duty Implementation, please contact the NFDA directly.”