The FCA consumer duty and the automotive industry:
In the UK from July 31st 2023, the Financial Conduct Authority (FCA) Consumer Duty comes into practice. The Consumer Duty regulatory frameworks aim to improve customer protection and promote ethical treatment of customers within financial services, including those operating in the automotive industry. Since the majority of dealerships utilise finance, warranty and insurance services to support vehicle sales, they will be subject to uphold these new standards. Mystery shop services can be used as a tool can support dealerships to assess and analyse their sales process from a customer’s viewpoint. Mystery shopping will be invaluable for dealerships as they implement and sustain consumer duty requirements.
The Consumer Duty focuses on customer needs as a foundation for all expected outcomes. Customer needs and experiences are applied at the forefront of all areas of the industry; from online sales through to showroom deals. Dealerships will need to demonstrate their intent to continually deliver good customer outcomes and be able to discuss their adherence to Consumer Duty with the FCA. This includes the provision of evidence of any reviews and assessments conducted as part of the implementation process.
An outline of the FCA Consumer Duty:
The Consumer Duty sets out three cross-cutting rules; act in good faith, avoid foreseeable harm, and enable customers to pursue their financial objectives. These cross-cutting rules act as a framework for expected behaviours, supporting dealerships to comply with the four required outcomes. For example, if a dealership is not acting in good faith to be transparent about their services, they will not be meeting the ‘consumer understanding’ outcome.
The four outcomes of the FCA’s Consumer Duty:
Products and services
This principle highlights the necessity of fair and ethical processes within the automotive industry. Dealers must ensure that products and services sold meet the needs of the customer. They should be confident that the customer has received adequate information to understand the benefits and risks of any agreements and make transparent, informed decisions. Whilst doing so being aware and considerate of any vulnerabilities that their customers may have.
Price and value
It is important to deliver products and services that meet customer needs whilst maintaining quality and value throughout their lifecycle. Dealerships must input appropriate risk management procedures to prevent financial exploitation of customers. This includes not overly inflating prices due to limited stock availability as well as reviewing incentives in their sales process, such as commission, to ensure they do not encourage the sales of products which are not in the customer’s best interest.
This principle aims to make sure that customers have easy access to all the necessary details to make informed decisions regarding their automotive purchases, such as vehicle financing, insurance, and warranties. To facilitate understanding, all information presented must be timely and transparent with appropriate adjustments according to the complexity of the products and the individualities of the receiving customers. Inclusive of customers with vulnerability characteristics, whereby information should be available in accessible formats and lay- terms when relevant to the customer. Reliable testing should be implemented to see how information is understood and to monitor how effective it is in practice.
Consumer Duty acknowledges increasing numbers of customers facing difficulty due to financial and personal circumstances, such as the cost-of-living crisis. Thus, adequate support and considerations for vulnerability characteristics must be implemented and evidenced at every stage of the customer journey. Support provided for customers must exist before, during and after the sale of any products of services. Additionally, there must be comprehensive and straightforward processes for customers to cancel, switch or complain about a purchase. These processes should not be any more complex or difficult than the initial sales agreement.
How can mystery shop services support automotive dealers?
Consumer Duty regulations provide an opportunity for automotive dealerships to reinforce customer loyalty and drive profitability by excelling customer experiences. This will inevitably will encourage best practice from dealers and generate more protection as well as better quality outcomes for customers. Automotive mystery shops enable dealerships to evaluate their customer experiences, monitor sales effectiveness and identify any areas for employee development and training.
Regularly implementing mystery shops allows dealerships to gather objective feedback of customer experiences using telephone, online or video methods. This generates opportunity to delve into the data and signpost knowledge or skills gaps in service and sales teams. Highlighting areas for improvement and establishing if communications are comprehensive and designed to meet customer needs. Understanding the customers entire sales journey allows dealers to review and improve their customer care processes, assessing how they align with consumer duty regulations.
Why choose MotorVise mystery shopping services?
‘Customers may not remember what you said to them. They may not remember what you did to them.
They will always remember how you made them feel. Build customer trust.’
– Fraser Brown, MotorVise, Managing Director.
MotorVise are industry experts and market leaders when it comes to mystery shopping in the automotive sector. Services are 100% automotive focused, the challenges faced by dealers are understood and solutions to these problems are available. All mystery shop data displays on a customisable dashboard; providing full access to detailed user reports. The user reports include supporting materials, such as screenshots and videos, and a range of tools for analysis and reporting. Shops are flexible, allowing bespoke assessment criteria to measure business performance and customer satisfaction across your company. Following all assessments, dealerships are then offered a detailed post-mystery shop consultation.
In the ever-evolving landscape of the automotive industry, mystery shops provide a valuable tool for dealerships to excel in customer experience, enhance sales processes and develop long-term customer loyalty. Mystery shops are a commitment to delivering exceptional customer service in a highly competitive market.
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