Motor finance lenders are searching for a solution amid growing uncertainty around the potential scale of the Financial Conduct Authority’s (FCA) commission investigation.
Following a landmark Court of Appeal ruling in October, which raised the possibility of car finance firms facing complaints and compensation claims for all types of commission, the Supreme Court has granted permission for two car finance lenders to appeal the decision.
The FCA investigation has previously focused purely on discretionary commission arrangements (DCAs), however it remains to be seen how the ongoing court wrangling will influence the financial watchdog’s final decision.
The bottom line is that, whichever way the FCA swings, lenders are facing a surge of complaints and future compensation claims, with some analysts suggesting that the total cost could run into the billions.
Myriad challenges to overcome
The broadening of the FCA investigation to include all commission, not just DCAs, would add to an already daunting list of challenges.
Foremost among the major obstacles to overcome would be the obvious increase in new complaints, enquiries, and data subject access requests (DSARs) landing at lenders’ doors, regardless of whether or not they sold motor finance with DCAs.
This would place a considerable strain on internal teams required to log, respond to DSARs and enquiries, and triage new complaints. Meanwhile, in-house teams will also be expected to continue to manage the flow of existing and incoming DCA-specific complaints.
Establishing a clear communication strategy also presents certain challenges.
The customer must receive a resolution within the regulatory timelines, with the necessary Financial Ombudsman Service (FOS) referral rights.
The percentage of customers who proactively contact lenders for an update on their complaint will also need to be minimised.
As with any major investigation and potential redress system that impacts consumers, claims management companies (CMCs) are already active in approaching motor finance customers who may be eligible for compensation.
The fact that the investigation is now expected to be widened to include all types of commission will inevitably lead to increased CMC activity.
Perhaps the most disruptive element of the investigation is the impact it will have on companies’ ‘business as usual’ (BAU) activities.
As firms look to respond to an uptick in complaints, resources to deal with non-commission-related enquiries will be stretched and customer experience (CX) could be adversely affected.
Don’t wait – prepare your solution now
With some industry experts claiming that the motor finance investigation could become ‘the next PPI’, time is of the essence to identify a solution that will reduce costs and preserve CX.
In the aftermath of the investigation into payment protection insurance (PPI), Firstsource played a pivotal role in supporting financial services firms with their response.
Providing complete end-to-end complaint management for a major credit card provider, Firstsource processed more than 250,000 complaints in just six months, with 99% of cases handled within 40 days. This led to increased customer satisfaction and a boosted net promoter score (NPS).
In terms of motor finance, Firstsource has established a three-phased approach to dealing with the implications of the investigation.
Stage One: Complaints and DSAR Management
Our highly experienced and expertly trained complaints handlers can provide much-needed support in managing an escalating volume of DSARs and complaints.
Meanwhile, further down the path, metrics-driven governance paves the way for robust remediation support.
With Firstsource shouldering the weight of complaints and compensation claims, your business is free to divert additional capacity for crucial BAU activities.
Stage Two: Complaints Investigation and Resolution
In times of stress and friction, the personal touch makes a big difference. This is why providing a dedicated complaint handler to individual customers is vital to ensure a seamless customer journey.
Behind the scenes, Firstsource can deploy tech-enabled complaints analytics to help smooth the process, while detailed investigation is carried out alongside our motor finance partners.
Stage Three: Remediation
In the event of the FCA investigation finding in favour of consumers, the motor finance lenders most likely to maintain customer satisfaction will be those that are best prepared.
Early identification and onboarding a business process services (BPS) partner with a track record of success in handling a widespread remediation process will be key.
Firstsource is equipped and experienced in managing the end-to-end process, ensuring no adverse impact on BAU activities.
Four pillars to ensure success
These four pillars provide the foundation for Firstsource’s motor finance offering:
1. Speed to Delivery
The quick deployment of skilled and experienced support teams is crucial in response to situations such as the motor finance investigation.
To ensure a speedy response, Firstsource embraces artificial intelligence (AI) recruitment, automated evaluation, skill gap analysis, and personalised learning journeys.
2. Ready-to-use AI assets
AI and smart automation play a central role in Firstsource’s motor finance proposition.
By leveraging RelAI – our proprietary framework to provide actionable insights to enhance response strategies – Firstsource can offer a true point of difference to lenders.
Additionally, other ready-to-use assets include complaints analytics, cognitive email studio, call/chat summariser, and chatbot analytics.
3. Data strategy and governance
Data validation and scenario analysis is an important consideration for firms impacted by the FCA investigation.
Firstsource can assess the availability and accuracy of data, while also validating the gaps. This is achieved via AI-led intelligent data capture and digital intake, and holistic customer analytics solution mining insights from unstructured customer conversations.
4. A balance operating model
Achieving the right mix of experience and complaint handling skills calls for a BPS provider who has ‘been there, done it, and got the t-shirt’.
At Firstsource, we offer flexible ‘right-shore’ delivery options with embedded skilled resources, case management systems, and process and decision-making tools – all of which enable significant savings and CX excellence.
Get in touch to find out more
Our experts would be delighted to provide further details on Firstsource’s DSAR and complaints handling expertise, including:
- Our complaints and remediation capability
- An overview of our experience in managing complaints operations with a leading UK bank
- An overview of our experience executing on DSARs for a leading UK bank
- An illustration of our DSAR handling expertise and similar exercises for other clients
For more information on how Firstsource can help your organisation navigate the challenges associated with the motor finance investigation, please complete the ‘talk to us’ form below…
