We know that most customers rely on some form of funding facility to purchase their next vehicle, and of course we want them to be using dealer finance.
Whereas there has been a huge amount of information on making showroom processes compliant, the same cannot be said of many automotive websites.
Making sure that your website is compliant with the consumer credit advertising rules is probably not a priority for your business at the best of times, but recent issues surrounding the OFT’s enforcement action against Carcraft have provided evidence that the regulator will take action where it sees customers are not being treated fairly.
So I’d like to reiterate one or two major points that you should be looking for as far as consumer credit compliance on the web is concerned.
Firstly, if you intend to provide examples of monthly payments on any of your used or new vehicles, then you need to make sure that you prominently display a ‘Representative Example’ of finance. This reflects the representative finance deal for all of the finance deals displayed within an advert, and the rules clearly state that there should only be ONE representative example in each advert (or on each web page).
So are you showing a representative example? If not, you are probably breaking the law. Have you got more than one representative example on any one web page? It is highly likely that your site isn’t compliant. Of course, by not mentioning finance payments of any description you negate the need to comply with the credit advertising rules – but why would you want to do that? Surely it’s better to compliantly display the information and show how affordable your stock can be?
The content of the representative example needs to be spot on also. Items such as the rate of interest (NOT the same as the APR!) and whether that interest rate is fixed or variable will be new to most dealers – these items weren’t required until the new rules in February 2011. But they need to be there. And we haven’t even started to look at the rules surrounding how prominent the information has to be.
I have come across several instances where the new rules are beginning to be enforced by the OFT. So what exactly could ‘enforcement’ action consist of? The answer depends of course upon the severity of the breach, so it varies widely. For instance, under section 1 of the Consumer Credit Act, you are provided with a Consumer Credit Licence by the OFT. Not many dealers know that this licence can be partly or fully revoked for serious breaches of consumer credit rules. How would not being able to offer finance facilities potentially impact your business?
Also, consider the potential for harm from the resulting bad press that will inevitable follow. For instance, I wonder how many car supermarkets or used car dealers are drawing customer’s attention to the OFT reporting of Carcraft….?