ACCESSING CUSTOMER DATA - GDPR, CONNECTED CARS, AND YOU - ADDLESHAW GODDARD
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July 2017 Issue 152 www.motorfinanceonline.com
Accessing customer
data
gDpR,
connected cars,
and you
news: What does the new CEO mean for Ford?
insight: Residual risk in the fleet sector
plus: Analysis of the FCA exploratory review
MF 152 July.indd 1 13/06/2017 13:48:07
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MF 152 July.indd 2 13/06/2017 13:48:08
TDBC Motor Finance - final design.indd 1 17/09/2015 11:56:22
FInance
MoTor
In ThIs MonTh’s Issue
n news n Insight
5 Richard Jones named FLA chair
5 RSM urges dealers to prepare 17 resIDuaL VaLues
for GDPR saad Ahmed investigates whether
5 Oodle and Carsnip sign residual values are at risk
partnership
5 Paragon launches caravan
finance
6 MBO at Aston Barclay
6 Toyota eyes Irish finance arm
6 ALD Automotive to launch IPO
7 US DoJ accuses FCA US of
cheating emissions tests n lnsight
7 Uber sacks former self-driving 8 Matt Dyer, BVrLa 18-19 GDPr 18 steve snaith, rsM
chief after Google scandal
8 OTM saad Ahmed examines what GDPR
9 Ford appoints Hackett as chief means for data protection and the
executive officer industry
9 Continental and Baidu form
‘technical alliance’
n opinion
11 Dan Bennett from Shoosmiths
looks at the FCA’s Occasional n lnsight
Paper 26
12 TLT’s Russell Kelsall and 20-23 connecTeD
Alanna tregear on where the
FCA may focus in its upcoming cars
review In an article sponsored by
13 Addleshaw Goddard’s neville intelligent environments, Motor
Cotton and sarah herbert on Finance investigates how the rise 20 spencer halil, alphera
13 sarah herbert, addleshaw
life after the FCA’s review of connected cars is impacting the
14 Could PCP be the next Goddard
industry
PPI? Gateley’s philip Alton
examines.
15 shaun Armstrong from
CreditPlus on taking
affordability seriously
15 Locke Lord’s Jo Davis and
n lnsight
d timothy Anson give an update
on FCA limitations on debt
permissions 29 DIVIDo
16 Robin skuse argues London Jonathan Minter speaks to Divido
may be reaching a tipping point to find out how the company plans
to change aftersales financing
n Databank
25 FLA/SMMT
26 Used car values
27 Europe focus and Crushwatch 14 Philip alton, Gateley 29 christer holloman, Divido
enTITIes In ThIs Issue
ACEA 27 FLA 25 Moneysupermarket 27
Addleshaw Goddard 13 Fleet Europe 17 MotoNovo 21
ALD Automotive 6 Ford 9 NACFB 16
Alphera 20 Gartner 20 Oodle Finance 5
Aston Barclay 6 Gateley 14 Paragon Car Finance 5
Baidu 9 Grant Thornton 17 Pentana Solutions 5
BCA 26 Hitachi Capital Corporation 8 Ratesetter 8
Black Horse 5 HPI 27 RCI Financial Services 20
BVRLA 8 Ignition 8
Carsnip 5 Intelligent Environments 20 RSM 5
CLM 8 KPMG 20 Shoosmiths 11
Close Brothers Motor Finance 20 Leaseurope 18 SMMT 25
Continental 9 Lex Autolease 20 Sofico 18
CreditPlus 15 Locke Lord 15 TLT 12
Divido 24 NACFB 16 Toyota Finance Services 6
FCA 11 Manheim 26 Uber 7
FCA Group 7 Moneybarn 20 White Clarke Group 8
www.motorfinanceonline.com July 2017 y 3
MF 152 July.indd 3 13/06/2017 13:48:56
15 11:56:22
FInance
MoTor
eDITor’s LeTTer
election bubble, toil and trouble
One of the things I’m consistently told is points to a lack of certainty.
that businesses don’t like uncertainty. Well,
after an independence referendum in Scot- What it means
land in 2014, a General Election in 2015, a What all this means for the motor and
referendum on EU membership in 2016 and motor finance industry is hard to say. The
another General Election this year, are things fact it looks like the Conservative party will
any more certain today than they were in hold onto power via a coalition suggests
2013? we’re less likely to see an about shift in poli-
I would argue no, but I’m sure we’re going cy compared to if, say, a Labour led coali-
to see pages of detailed analysis over the tion had won the day. This probably means
coming weeks as to what the potential new the Financial Conduct Authority (FCA) will
look Tory-Democratic Ulster Party (DUP) continue to operate as it has, Senior Manag-
coalition Government is going to look like, ers Regime and all. Bills like the draft Air
how it’ll work, and what it’ll mean for the Quality Plan are likely to continue to pro-
wider economy and for Brexit. One thing I gress through the houses, and we’ll likely see
suspect there will be a degree of uniformity continued government support for the
on is the perception that this wasn’t exactly uptake of electric vehicles and autonomous
the result Theresa May was looking for, but technology research.
beyond that there are all sorts of questions But beyond that, it’s hard to escape the
that will be asked. feeling that these remain uncertain times. circumstances, how can business be confi-
This uncertainty is reflected in the lack of Brexit is the perfect example of this. Under dent of the future?
press releases I’ve received so far. Writing the the Tory majority, it was looking increas- All of which leads to the potential for
afternoon after the election, I’ve so far only ingly likely we’d be facing a hard Brexit, another election sooner rather than later, or
received one release commenting on the however the DUP – with an eye on the Irish perhaps even another referendum on leaving
result – which itself was mostly talking border – has campaigned for a softer ver- the EU in the future.
about uncertainty. In contrast, normally sion. Which version will win out is anyone’s
after a national event I receive dozens of guess at this point.
comments and opinions, explaining how the Even beyond that, this coalition boasts a Jonathan Minter
author thinks such and such event is going to majority of just two. This means it would jonathan.minter@verdict.co.uk
affect the industry. Clearly people are still take just two MPs to vote against a piece of
trying to decide what it means – which again legislation to potentially derail it. In these
Subscription Enquiries & Customer No part of this publication may be
Services reproduced in any form whatsoever
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Tel +44 (0) 203 096 2603 the copyright owner.
Or +44 (0) 203 096 2636 ISSN 1748-1333
July 2017 iSSuE 152 Picture resources:
shutterstock.com, Headline Auto
Editorial loNdoN oFFiCE
Jonathan Minter – Editor Group Publisher 7 Carmelite Street
T: +44 (0)207 406 6705 ameet Phadnis London
jonathan.minter@verdict.co.uk T: +44 (0)207 406 6561 EC4Y 0AN
News desk ameet.phadnis@uk.timetric.com Motor Finance is available in print
T: +44 (0)207 406 6538 Subeditors and online by subscription.
Saad ahmed Sophia Bell
T: +44 (0)207 406 6538 Nick Midgley Motor Finance is published monthly
saad.ahmed@verdict.co.uk by Financial News Publishing Ltd.
4 y July 2017 www.motorfinanceonline.com
MF 152 July.indd 4 13/06/2017 13:49:07
news
rounD-uP
Richard Jones named FlA chair Oodle and Carsnip
Richard Jones, managing director of Black
Horse, has been named as the new chair of
of detailed negotiations on the UK’s exit
from the EU.
sign partnership
the Finance & Leasing Association (FLA). “Richard’s experience – including on the Motor finance provider Oodle Finance has
Jones was already a board director at the FLA’s Board – will be invaluable as we agreed a partnership with car search engine
FLA, and replaces outgoing chair Nigel continue to make the industry’s case to Carsnip to match car buyers with dealers,
Clibbens, whose term has ended. politicians, our regulators and our many and support financing transactions in
The appointment was announced on 16 stakeholders. I look forward very much to real time.
May at the FLA’s annual general meeting at working with him.” Carsnip will add an optional ‘finance
Saddlers Hall, London by director general Jones said: “It is a privilege to become now’ button to search results, linking
Stephen Sklaroff, who also updated chairman in the FLA’s 25th anniversary year. prospective buyers to Oodle Finance.
attendees on the FLA’s progress. In a period of increasing change and Dealers will be paid commission on all cars
Sklaroff said: “Richard is taking over as uncertainty, the FLA will continue to play a financed by Oodle.
chairman of the FLA at a particularly lead role in developing the markets it Oodle chief executive Jonathan Clayton
important time for the industry, with the represents for the benefit of consumers and said the deal could shorten the process of
prospect of a new government and the start businesses across the UK.”< financing used cars.
Clayton said: “Both Oodle and Carsnip
RsM urges dealers to prepare for gDpR believe technology can bring car buyers and
car dealers closer together, for a more
ransomware attack, and said more seamless and effective experience.
safeguards were needed. He added that “This exciting partnership was the logical
GDPR would drastically affect the future of next step in our collective desire to optimise
storing personal data, and warned of this process and make life easier for car
business disruption. dealers and borrowers.”
Snaith said: “It’s increasingly important to Alastair Campbell, chief executive officer
make sure clear processes and safeguards are of Carsnip, said the deal would prevent
put in place to protect both clients and online finance companies from receiving car
companies. dealers’ commission.
“Businesses must make sure they are ready Campbell said: “This new partnership
for what lies ahead and not get caught out, promises to deliver a much simpler way to
as the financial and reputational risk could finance a car by linking search with finance,
be significant.” while protecting dealers’ finance
commission.” <
Pentana Solutions: GDPR ‘positive’
for dealers
Automotive software company Pentana paragon launches
Solutions has said that it believes GDPR
could be a catalyst for positive change in the
caravan finance
automotive industry. Paragon Car Finance has launched a caravan
Pentana claimed GDPR could enhance finance offering, after introducing a hire
dealer performance, with Mike Gadd, vice- purchase product for motor homes in June
Accounting firm RSM has urged dealers to president and UK general manager, calling last year.
prepare for the EU General Data Protection for dealers not to see it as an inconvenience. The West Midlands-based motor finance
Regulation (GDPR). Gadd said adopting GDPR would allow provider said it aims to bring greater choice
The regulations are due to come into force dealers to make marketing and customer- to the caravan market, and will provide
on 25 May 2018, and RSM has advised deal- retention activities more effective, and said finance for terms up to 10 years.
ers to prepare themselves to prevent financial dealers should avoid delaying action or seek- Paragon Car Finance said it intends to
losses and risks to their reputation resulting ing ways to work around the change. replicate the formula for its motor home
from non-compliance. He said: “Right now, there is a huge push finance product, which was extended to
GDPR will require data processors and to get GDPR ready in the industry. I am cover terms of up to 10 years in August.
third-party contractors to protect individu- pleased to see this because we have been Paragon Car Finance head Julian Rance
als’ data, an extension from the EU’s 1995 championing a positive approach to GDPR said extending into caravan finance was a
data protection regulation which placed for some time.” “natural next step” for the lender, and
liability on the data controllers alone. Gadd claimed that the mixed quality of claimed there was demand for the product.
Failure to comply could see businesses face data had caused ineffective marketing, and Rance said: “We are confident that our
fines of up to €20m, or 4% of annual global adhering to GDPR could improve dealers’ bespoke underwriting, competitive rates and
turnover, whichever is greater. approach to data, and, as a reulst, their per- the direct access we offer to our underwriting
RSM said dealers must ensure their data formance. team will ensure we replicate the success
processes protect individuals’ data rights, Gadd added: “GDPR and its associated we’ve had in the motor home market with
and advised that they adopt an organised time and cost implications can be the cata- this new product.
data protection programme that records all lyst for a richer approach to data, its capture, “We also feel now is the right time to
data activities. maintenance, and development in sales and bring more choice to the caravan finance
Steve Snaith, technology risk assurance aftersales. Get it right and they can help their market, allowing customers a greater range
partner at RSM, cited the recent WannaCry customers and their bottom line.”< of options,” Rance added. <
www.motorfinanceonline.com July 2017 y 5
MF 152 July.indd 5 13/06/2017 13:49:24
news
rounD-uP
Management buyout at Aston Barclay toyota eyes irish
Martin Potter has joined the board as well,
and will operate as group operation director,
finance arm
to be supported by national operations
manager Brett Henderson. Stewart Ford has
also joined the company from cap hpi as
group IT director, as the company looks to
invest in its digital strategy following the
Rutlands investment.
Hodson said: “Aston Barclay is a great
business and Rutland Partners’ multi-million
pound investment across all areas will help
further develop our service offering for both
buyers and vendors.
“Our aim is to be at the forefront of
shaping the remarketing industry, reinforcing
our position as the leading independent
provider in the market.”
Glenn Scarborough said: “We are pleased Toyota Financial Services is planning to
to welcome Neil and his management team extend its lending capabilities to the Irish
l-R: glenn scarborough, neil as investors in Aston Barclay, supported by market, Motor Finance has learned.
hodson, Oliver Jones, Aston Barclay Rutland Partners. Reports initially began to emerge in the
“These are exciting times for the Irish Independent that the company was
Aston Barclay has gone through a remarketing industry and we are confident planning a launch in the Republic of Ireland,
management buyout (MBO), with support the support and the investment will enable where Toyota enjoys a strong market
from a multi-million pound investment from Aston Barclay to exploit the opportunities presence. Although the paper did not reveal
Rutland Partners. for growth that the market has to offer.” its sources, it did note that manufacturers
The MBO was led by new chief executive Among the more immediate impacts of the have been stepping up low-interest financing
officer Neil Hodson, who joined the MBO and investment will be a new 18-acre deals to combat recent declines in sales.
company after stints at HPI, Manheim and site at Donington Park, which Aston Barclay According to the Society of the Irish
Experian. Glenn and David Scarborough, announced at the same time as the MBO. Motor Industry (SIMI), new car
formerly group managing director and The site will be based in the park’s Engine registrations in April were down by 7,865
commercial director respectively, will both Room exhibition space, and will serve as (24%) in April 2017, compared to April
remain company shareholders as non- Aston Barclay’s central hub for all 2016, with year-to-date figures down 10%
executive directors. remarketing operations, as well as being the year on year.
Hodson is among a number of new senior home to a new buyer services and account Commenting on the figures, SIMI director
staff at the company. Laurence Vaughan has management team. It will be large enough to Alan Nolan said: “From our recent SIMI/
joined the board as non-executive chair. house up to 400 cars under one roof. DoneDeal Quarterly Review, we
Vaughan is also non-executive chair of The Donington Park site will be open in commented that 2017 was proving to be
Sytner Group, having previously been chief the fourth quarter of 2017, with further unpredictable for the motor industry, and
executive officer there. network expansions planned. < the month of April appears to be reflecting
this statement.
AlD Automotive to launch ipO “Vehicle registrations for April show a
decline in all sectors and across nearly all
French banking group Société Générale has stake could yield up to €1.4bn, although the counties. While the economy continues to
announced the initial public offering (IPO) figure could reach €1.62bn if the option of strengthen, consumers appears to have
of ALD Automotive, its fleet leasing overallotment is exercised, valuing the remained somewhat more cautious to date.
subsidiary, on the regulated market French fleet lessor at between €5.74bn “That said, the industry is continuing to
Euronext Paris. and €7.04bn. entice consumers with very strong offers, to
SocGen initially announced the decision to SocGen says the IPO is “intended to the degree that even with lower sterling
list in the “middle of 2017” in February, enable the group to gain visibility and values as a result of Brexit, virtually no new
after announcing ALD Automotive’s full- reputation in the mobility ecosystem.” cars have been imported because of the
year results for 2016. The parent company said it expected ALD value available here,” Nolan added.
SocGen is expected to sell a 20% stake in shares to start trading on Euronext Paris on Toyota was the best-selling brand over the
ALD, amounting to 80.8m shares, with the 16 June, with the settlement and delivery of first four months of 2017, with 8,329
potential to list 23% of its shares. The offer both the French and international offerings passenger cars sold in the period, and was
period for France will last from 5 to 14 June, to be scheduled on 19 June. also the best-selling brand in 2016.
while the international offer will close on Frédéric Oudéa, chief executive officer of When asked to comment, Toyota told
15 June. Société Générale, said: “The IPO confirms Motor Finance: “Toyota Financial Services
Prices for both domestic and international the strategic nature of ALD within the has plans to expand its worldwide
offerings will range between €14.20 (£12.37) Société Générale group. operations into the Irish market at some
and €17.40 per share, with pricing of the “It will allow ALD to accelerate its point in the near future, but at this stage
global offering expected on 15 June. development and become a leader in a there is no fixed date for the start of business
According to estimates, the sale of a 20% rapidly changing mobility space.”< as plans are at a very early stage.”<
6 y July 2017 www.motorfinanceonline.com
MF 152 July.indd 6 13/06/2017 13:49:40
news
rounD-uP
us DoJ accuses FCA of cheating emissions tests
The US Department of Justice (DoJ) has filed conformity and that affect the vehicles’
a civil complaint in a Detroit federal court emission control systems.”
against Fiat Chrysler Automobiles (FCA) US, The civil complaint filed seeks injunctive
alleging that the manufacturer had cheated relief and the assessment of civil penalties.
in emissions tests. Responding to the complaint, FCA US said it
The DoJ said it had filed the complaint on had been working with the EPA and the
behalf of the Environmental Protection California Air Resources Board (CARB) for
Agency (EPA). Specifically, the DoJ said many months, including extensive testing of
nearly 104,000 light-duty diesel vehicles the vehicles, to clarify issues related to the
containing 3.0 litre EcoDiesel engines were company’s emissions control technology in
equipped with software functions not the 2014-2016 Jeep Grand Cherokee and
di sc l ose d t o r eg u la to r s d u r in g th e Ram 1500 diesel vehicles.
certification application process, and that the It said: “FCA US is currently reviewing the
vehicles contain ‘defeat devices’. complaint, but is disappointed that the DOJ
The complaint alleged that the undisclosed has chosen to file this lawsuit.
software functions cause the vehicles’ “The company intends to defend itself
emission control systems to perform vigorously, particularly against any claims Subject to permission from the EPA and
differently, and less effectively, during certain that the company engaged in any deliberate CARB, FCA US said it intended to install the
normal driving conditions than on federal scheme to install defeat devices to cheat US same modified emissions software in 2014-
emission tests, resulting in increased emissions tests.” 2016 Jeep Grand Cherokee and Ram 1500
emissions of harmful air pollutants. In addition, the company revealed that it diesel vehicles. FCA US believes this will
The vehicles in question were the Ram had developed updated emissions software address the agencies’ concerns over emissions
1500 and Jeep Grand Cherokee models sold calibrations that it believes address the EPA’s software calibration in the vehicles.
between 2014 and 2016 in the US, which the concerns, and has now formally filed for So-called ‘defeat devices’ and diesel
DoJ said contained “at least eight software- diesel vehicle emissions certification with the emissions have been under the microscope
based features that were not disclosed in regulators for its 2017 model Jeep Grand since Volkswagen admitted using them in the
FCA’s applications for certificates of Cherokee and Ram 1500 diesel vehicles. US in 2015. <
FCA Fleet seRviCes uK lAunChes pCh OFFeR
FCA Fleet Services has launched a personal meo Giulia and the Jeep Renegade, Cherokee PCH remains a relatively small product in the
contract hire (PCH) product for Fiat, Alfa Romeo and Grand Cherokee models. Terms include UK, however, according to cap hpi, many deal-
and Jeep models. The package includes mainte- 24-60-month terms, 3-24-month initial rental, ers expect it to continue to gain market share
nance, servicing and even tyre replacement. and up to 150,000 miles covered over the throughout 2017.
The lender has branded the PCH offer Be-Free, contract duration.
FCA Fleet Services is part of FCA Automotive
and also includes a fund licence for the contract Franck Gaillard, rental and fleet director at FCA
duration, breakdown cover and roadside as- Services UK, which specialises in financial ser-
FS, said: “Personal contract hire is designed to
sistance in the UK and Europe, and free GAP be simple and hassle-free, and that is exactly vices for the purchase and contract hire of Fiat
waiver, which covers any early termination cost what we have achieved with our new Be-Free Chrysler Automobiles vehicles. It is part of FCA
in the event of a write-off. product. I am delighted with this new offer Bank, a financial joint venture established by
It has been made available for the Fiat Tipo which will provide complete cover across a large Fiat Chrysler Automobiles and French banking
Hatchback, Tipo Wagon and 500X, the Alfa Ro- number of our model ranges.” group Crédit Agricole. <
uber sacks former self-driving chief after google scandal
Ride-hailing company Uber has fired the for- to analyse the environment around them. The letter, dated 26 May, says Levan-
mer head of its self-driving car programme, Waymo alleges that Levandowski knowingly dowski was sent letters asking to comply
months after he was accused of stealing stole the technology to start Otto, and then with requests for co-operation on 20 April
secrets from Google’s self-driving car pro- took it to Uber once acquired. The injunc- and 15 May, and that Levandowski had not
gramme. tion required Levandowski to be taken off complied with either.
Anthony Levandowski joined the embat- any lidar-related projects, and ordered the It also stated that he had breached his
tled company in August last year, when return of Waymo documents. employment terms by failing to return or
Uber acquired self-driving startup Otto, Levandowski was removed from his post destroy documents from Waymo.
where he was a co-founder. Before founding at the end of April, although remained The letter gave Levandowski until 15 June
Otto, Levandowski worked at Google’s self- employed by the ride-hailing company until to comply and prevent the termination from
driving car project, known as Waymo. It is this point. In his termination letter, which coming into force.
alleged that he stole more than 14,000 inter- has been obtained by several publications, Uber continues its legal battles this year,
nal documents from the project and took Uber general counsel Salle Yoo claimed Lev- which have so far seen it ordered to pay tens
them to Uber. andowski had impeded both the lawsuit and of millions of dollars for underpaying its
Waymo sued Uber in February 2017, and Uber’s own internal investigations. drivers in New York, a lawsuit by rival Lyft
was granted a preliminary injunction against Levandowski opted not to provide testi- which accuses it of monitoring its drivers,
the company in May. The case hinges around mony or hand over evidence regarding his and numerous claims of harassment.
light-detection and ranging (lidar) technol- use of documents at Google during the court The case between Uber and Waymo goes
ogy, which allows autonomous vehicles proceedings. to trial in October of this year. <
www.motorfinanceonline.com July 2017 y 7
MF 152 July.indd 7 13/06/2017 13:50:04
news
PeoPLe MoVes
peOple On the MOve
BVrLa appoints Dyer as chair Ignition appoints o’connor as head of own- The move comes during a period of change for
book lending RateSetter, following the acquisition of motor
Asset and motor finance provider Ignition has finance providers Vehicle Stocking and Vehicle
appointed three people to its team, including Credit, and the end of its wholesale funding
Alan O’Connor to head its own-book lending proposition.
portfolio. As chief risk officer, Wright will be tasked with
O’Connor has spent over 20 years in the finance overseeing and managing credit risk across
industry, and has previously held trade finance consumer and commercial lending businesses,
and risk management positions at Jaguar Land and supervising operational and conduct risk
Rover and Aston Martin. at RateSetter. From September, Wright will be a
member of the executive team, and sit on the
Steve Haysom has been appointed business board risk committee.
development manager, joining from Lombard
where he served as a relationship manager. He white clarke Group appoints VP
will be tasked with strengthening Ignition’s offer-
ing in the South West region.
Stuart Berry has been appointed broker manag-
er, joining from Shire Leasing where he worked
in broker management. Berry will be based in
Manchester, and will focus on Ignition’s broker
relationships in the North.
cLM appoints short as commercial director
Matt Dyer, BvRlA Fleet manager CLM has appointed Andy Short
as commercial director, with responsibility for
Matt Dyer has been named chair of the British client services and supplier relationships with
Vehicle Rental and Leasing Association (BVRLA). vehicle lessors and manufacturers.
He has taken over from Hitachi Capital Corpora- Short has over 20 years’ experience in the UK
tion’s Simon Oliphant, who has stepped down fleet and automotive sectors, and this role will
to the position of vice-chair after completing a see him lead the 13-strong client services team.
two-year term.
He said: “In my new role, I shall be looking
Dyer has been with LeasePlan for over 20 years after all business development activities for David slider, white Clarke group
including roles with LeasePlan Corporation and existing customers. One of my initial priorities is
LeasePlan International. He joined the BVRLA’s to explore wider fleet service possibilities with Automotive technology provider White Clarke
Committee of Management in August 2014, and existing customers in order to deliver greater Group has appointed David Slider as group
was appointed to the position of vice-chair in value to them.” executive vice-president.
May 2016.
CLM Fleet Management was acquired by the The company said Slider had been brought in to
Dyer said: “I am looking forward to helping the Maxxia Group in 2013, and manages more execute strategic acquisitions and partnerships,
association and our members. We will be at than 14,000 vehicles. Short said being part of and solidify the company’s global expansion into
the heart of the discussion on the big issues a larger group brought additional benefits for target markets including North America, Asia
of the day – and whatever’s on the horizon, CLM’s fleet customers. and South America.
from the challenges surrounding air quality and
Slider’s 30-year career has generally been in
emissions to the opportunities surrounding con- ratesetter hires ex-Ge capital uk cro wright
the US automotive industry. Most recently, he
nected data. Informing our members and help- Peer-to-peer lender RateSetter has appointed was managing director, automotive finance for
ing them to understand the positive impact the Joanna Wright, former chief risk officer, UK at GE a global loan origination and servicing software
sector can have underpins everything we do.” Capital, to head its own risk department, filling company. Before this he held a number of
His role as chair was made official following the a position that had been vacant for almost six executive roles.
BVRLA’s AGM, where Ian Tillbrook, fleet director months. Slider said: “My goal is to further the market’s
at VW Financial Services, was named chair of Wright led a team of over 200 risk profession- awareness that we are primed to serve the
the BVRLA’s Leasing & Fleet Management als at GE Capital, chaired the enterprise risk transformational needs of lenders today with
Committee. management committee, and was a member solutions that are engineered with the future
Elsewhere in the BVRLA, Spencer Blake of Wes- of the executive board. She has also worked at built in. Lenders no longer need to settle for
sex Fleet has replaced Fleetdrive’s Mike Potter NatWest Markets, where she was manager of less-than-agile, open, digital-ready end-to-end
as chair of the association’s Leasing Broker acquisition finance. She replaces Cyrille Sallé de systems that can successfully manage the com-
Committee. Chou, who left to join HSBC in December 2016. plex competitive and regulatory landscape.”<
8 y July 2017 www.motorfinanceonline.com
MF 152 July.indd 8 13/06/2017 13:50:23
news
rounD-uP
Ford appoints hackett as chief executive officer
Ford Motor Corporation has named Jim
Hackett president and chief executive officer,
replacing Mark Fields, and appointed many
others in an operational restructure.
Hackett joins Ford from office furniture
company Steelcase, and served on Ford’s
board from 2013 until 2016. He has led
Ford Smart Mobility since March 2016.
Hackett will lead Ford’s worldwide
operations, reporting to executive chairman
Bill Ford. He and Ford will focus on
modernisation, improving operational
execution, and transformation.
Commenting on his appointment, Hackett
said: “I have developed a deep appreciation
for Ford’s people, values and heritage during
the past four years as part of the company, Jim Farley has been appointed as executive effective from 1 June, with successors to
and look forward to working together with vice-president and president, global markets. their previous roles to be announced.
everyone tied to Ford during this Joe Hinrichs has become executive vice- Ford also appointed Mark Truby as vice-
transformative period.” president and president, global operations, president, communications with immediate
Ford has also appointed three leaders, while Marcy Klevorn has been named as effect, reporting to Bill Ford, and Paul Ballew
reporting to Hackett, following a restructure executive vice-president and president, as global chief data and analytics officer,
of its operations. mobility. The three appointments are reporting to Klevorn. <
MOtOR FinAnCe OpiniOn: FORD’s AppOintMent
It seems Fields paid the price after sluggish right CEO to lead Ford during this transformative y Transforming the company to meet future
stock performance in recent years from the US period for the auto industry and the broader challenges by ensuring the company has the
car manufacturer, which has resulted in upstart mobility space. right culture, talent, strategic processes and
electric car company Tesla overtaking it by “He’s a true visionary who brings a unique, nimbleness to succeed as society’s needs
value, if not by sales. human-centered leadership approach to our and consumer behaviour change over time.
The decline in Ford’s share value and the culture, products and services that will unlock In these three priorities, the words ‘car’ and ‘au-
departure of Fields came despite Ford actually the potential of our people and our business.” tomobile’ do not appear. Instead, the priorities
posting healthy profits in 2015 and 2016 – the Hackett’s history reinforces the idea Ford is for Hackett include AI and big data, two areas
company recorded a $10.4bn (£8.06bn) pre-tax going to be pushing further away from viewing that people traditionally associate with technol-
profit in 2016, which was more than Tesla’s itself as a traditional car company. Whereas ogy companies such as Google, Microsoft and
entire revenue for the year ($7bn). Fields joined Ford in the late 1980s and worked even Tesla.
The problem Ford has had, however, has been his way up, Hackett only joined Ford a few years Notably Hackett has also been tasked with
transitioning – or at least being perceived to be ago. Instead, his background includes time as transforming the company. Clearly it is not the
transitioning – from a traditional car manufac- CEO of office furniture company Steelcase, and company it wants to be.
turer into a so-called mobility provider. Com- as interim athletic director at the University However, this is not to say Ford will suddenly
menting on the 2016 results, Fields described of Michigan. stop producing cars. Cars are the manufactur-
Ford as “an auto and a mobility” company. According to Ford, Hackett has three initial er’s route to market, its bread and butter, and
priorities: will continue to be absolutely vital to its future.
By replacing him with Hackett — who previ-
ously led Ford’s Mobility team — the company y Sharpening operational execution while The difference now is that Ford sees the produc-
has categorically stated on which side of the decisively addressing underperforming parts tion and sale of cars as part of a wider mobility
auto-mobility coin it sees its future. Bill Ford of the business. cycle, of which the vehicle is just one element.
said as much when announcing the appoint- y Modernising Ford’s business using the The appointment is a bold statement of where
ment: “We’re moving from a position of strength likes of big data, artificial intelligence (AI), Ford sees its future: as a mobility provider, of
to transform Ford for the future. Hackett is the advanced robotics, 3D printing and more. which the car is just one element.<
Continental and Baidu form ‘technical alliance’
German automotive manufacturer and technology from their respective sectors Qi Lu said the deal would see the two
Continental has entered into a “technical to move towards solutions for autonomous companies make use of artificial intelligence
alliance” with Chinese internet giant Baidu, driving, connected vehicles, and intelligent (AI).
to help develop intelligent mobility based mobility services. He added: “AI has great potential to drive
around connected and autonomous cars. Elmar Degenhart, chair of Continental’s social development, and one of its biggest
The agreement was signed on Wednesday executive board, said the collaboration could opportunities is intelligent vehicles.
31 May in Berlin by Frank Jourdan, member “take intelligent mobility an important “By joining with Continental, we are
of the executive board of Continental and step further.” striving to upgrade intelligence in the
president of the chassis and safety division, The companies will explore technology automobile industry and develop a new
and Qi Lu, group president and chief such as sensors, driver assistance systems, ecosystem of intelligent mobility and
operating officer of Baidu. The alliance will and data collection and analysis for automated driving, thus empowering
see Continental and Baidu share resources autonomous driving. existing industries and new ones.”<
www.motorfinanceonline.com July 2017 y 9
MF 152 July.indd 9 13/06/2017 13:50:36
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MF 152 July.indd 10 13/06/2017 13:50:39
IE Motor Finance - final design.indd 1 05/05/2016 10:02:37oPInIon
shoosMIThs
promoting further debate: the FCA and financial promotions
In April the FCA published Occasional Paper 26, encouraging debate on financial promotions and
pointing to ‘rigorous evidence’ in support of the existing financial promotions regime. Is this a hint of
things to come, or does it simply consolidate existing FCA rules? asks Shoosmiths’ Dan Bennett
O
ccasional Paper 26, titled From advert
y see
to action: behavioural insights into
advertising of financial products, is FCA observations lessons to be learned
divided into three stages – See, Interpret and The consumer’s attention is not necessarily attracted
There should always be sufficient contrast between the
by the brightest or most detailed elements of an
Act – which together present a framework image. Instead, a consumer is attracted by objects
text of key information and its background to ensure that a
for understanding how consumers process consumer’s attention is drawn to it.
which are most different from their background.
information in financial promotions. If the FCA is acknowledging this issue, it is reasonable to
We set out below what we feel are the key assume that it will work to address this in the future. This
lessons to be learnt from each section in turn. could see a general shift away from reliance on small print
A consumer rarely pays full attention to the small print at the bottom/end of a financial promotion.
in a financial promotion. The more one can do to place key messages in the
See main text or headline of a financial promotion, the more
The Financial Conduct Authority (FCA) has prepared one will be for the possible small-print-free world
noted that people notice things that are of the future.
salient – that is, objects which stand out from Placing small print at the bottom of a financial promotion is
A consumer will typically view a financial promotion counter-intuitive, and potentially misleading.
their environments because they differ from
in an F-shaped pattern, with objects on the top-left Efforts should be made to place small print where a
them in colour, size or because of other locations tending to be viewed before, or more consumer is going to see it: in the top or middle sections of
attributes. frequently, than objects on the right or lower locations. a financial promotion. Again, it looks like the days of small
This means it is important to take into print in the footer of a financial promotion are numbered.
account the relative salience of different y interpret
items in a financial promotion when
FCA observations lessons to be learned
considering what a consumer will likely take
away from it. With this in mind, digital financial promotions should
(ideally) present text on screen at the same time as it is
The FCA has noted that framing – the Information needs to be presented for long enough,
read by an announcer, should disperse key messages
and with sufficient clarity, that consumers can process
presentation of information in a way that throughout the advertising content, and should keep
it beyond just noticing it.
encourages a particular interpretation, the critical messages short at all times. All these techniques
help messages to be interpreted correctly.
presentation of numbers and using
implication as opposed to statements of fact Care should always be taken to present financial
– affects consumer understanding. information in the clearest terms possible, while remaining
Consumers are highly likely to make errors when
within the remit of the FCA’s Consumer Credit Sourcebook
This creates the potential for consumers to processing numbers, and advertisers often assume
(CONC).
unrealistic levels of financial literacy.
misunderstand and for advertisers to Notwithstanding the prescriptive requirements currently
For example, many experiments report a low level
mislead. set out in Chapter 3 of CONC, it may well be time for a
of consumer understanding of financial terms like
shift away from financial terms and numbers in financial
‘annual percentage rate’.
advertising. It will be interesting to see how Chapter 3 of
Act CONC develops in the future to cater for this shift.
The FCA has noted that a consumer may be
Common techniques like framing (discussed
influenced to purchase a product through earlier), drip pricing (presenting an initial cost and Advertising techniques like framing or drip pricing should
appeals to emotion, the use of principles of then adding additional or optional costs later) and not be used where a potential to mislead exists.
influence such as scarcity or the use of rules anchoring (placing favourable outcomes at the start For example, framing costs over a shorter period of time
of a financial promotion even when the likelihood of or relying on language like ‘zero’ or ‘0%’ in a misleading
of thumb, and that these techniques may not achieving said outcomes is low) should only be used manner should be avoided’, and falls short of the FCA’s
be noticed by a consumer, nor factor in a fair and proportionate manner and with potential “clear, fair and not misleading” ideal.
consciously in a consumer’s decision. detriment borne in mind.
y Act
Key questions FCA observations lessons to be learned
The FCA acknowledges that problems can
While it is a central premise of advertising that Advertising on the basis of emotion will only be suitable in
occur at every stage of a consumer’s an advertiser can influence a consumer through low-risk environments. In riskier areas reliance on emotive
information processing, and accepts that a unconscious processes, including by appealing to techniques, which encourage consumers to act without
risk of confusion or misunderstanding can instinctive reactions, advertising on the basis of their overt and conscious consideration, could lead to
emotion will not always be suitable. misunderstanding and detriment.
never be removed entirely.
However, the FCA encourages advertisers product or service on offer? However, it does provide a useful steer as to
to think about a financial promotion from • What techniques does the financial the FCA’s current focus, and what “clear, fair
the point of view of a consumer in order to promotion use to encourage a certain and not misleading” should look like in
fairly assess the appropriateness of a interpretation? Are these techniques fair, practice.
financial promotion before it is published. justified and proportionate? The paper also hints of what the financial
The FCA indicates that the following promotions regime might look like in the
questions might be a useful place to start: It is important to note that this paper has future. If psychology, sociology and
• Will a consumer understand the financial no effect on a firm’s obligations to comply economics are going to be relevant
promotion? with existing rules in respect of financial considerations, a more consumer centric,
• Will the financial promotion give a promotions, including Chapter 3 of the flexible and holistic financial promotions
consumer a balanced impression of the FCA’s Consumer Credit sourcebook. regime may be just around the corner. <
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16 10:02:37oPInIon
TLT
the FCA review: what will the focus be?
Russell Kelsall, partner, and Alanna tregear, solicitor, from UK law firm TLT, outline some of the areas
they predict the FCA could focus on, and the potential impact to the market, including product
selection, remuneration of sales staff, commission structures and responsibility for add-ons
T
he FCA is looking at the role of finance Disclosure to customers was introduced expect it to contact dealers, brokers and
providers, dealers and consumers. But by the Office of Fair Trading’s guidance motor finance providers to ensure
what could be its likely focus? And is it issued in November 2011. The FCA made a information is gathered on a formal and
likely to significantly change the market? specific rule broadly requiring the existence informal basis, but more regularly.
of commission to be disclosed in CONC. The FCA has said it will, following the
Product selection However, the Courts have been very active review, assess whether and how to intervene
The FCA’s rules for consumer credit are in disputes on commission disclosure. The in the market. Even if the FCA finds a well-
contained in the Consumer Credit UK Supreme Court decided in Plevin v functioning market, it will normally propose
Sourcebook (CONC). It provides detailed Paragon Personal Finance (1) Ltd [2014] changes to the regulatory requirements – see,
rules and guidance which supplement the UKSC 61 there could be an unfair for example, the FCA’s recent work in the
high-level Principles for Businesses, which relationship where commission was not credit card market.
includes treating customers fairly. CONC disclosed, depending on its size. The Court There has never been a better time for
requires a dealer or broker to recommend a of Appeal also unhelpfully awarded lenders, brokers and dealers to review
product which is not unsuitable to them. commissions to customers in McWilliams v policies and procedures. Just because
Unlike mortgage regulation, there is no ‘best Norton Finance (UK) Ltd [2015] EWCA Civ something has been done for a period of time
interest’ rule. There are many reasons for 186, where the existence but not the amount does not mean the FCA will have no issues
this, including, most obviously, the process was disclosed, and Nelmes v NRAM plc with it. The FCA is looking at the market
of securing a sizeable mortgage is an [2016] EWCA Civ 491, where neither the with fresh eyes, and will want to ensure
understandably slower process. existence nor the amount was disclosed. consumers are adequately protected. But
Sellers of credit finance also do not need to But the position appears to be changing in there is also an opportunity for the industry
be certified, but mortgage advisers do. There favour of lenders, brokers and dealers, with to put forward arguments about what can be
is nothing inherently wrong with this: the High Court’s recent decision in done to make the market work better. Is the
Different markets need different rules. Commercial First Business Ltd v Pickup customer journey as good as it should be? It
However, the FCA will probably want to [2017] CTLC 1. Time will tell whether full is certainly the case a customer receives a lot
understand why dealers and brokers suggest disclosure of the existence and amount is of paperwork, but is it all really necessary?
(or, where appropriate, recommend) certain required by the FCA. The FCA may see this review, combined
products to customers. It will want to know with Brexit, as an opportunity to simplify the
the steps taken to qualify the customer for Responsibility for add-ons sales process and ensure consumers are given
the product, and how it can be justified as Following an unhelpful Court of Appeal more accessible information. For example,
being ‘not unsuitable’. The sales process and decision in Forthright Finance Ltd v Ingate the strict form of the SECCI could be
documentation will play crucial roles in how [1997] 4 All ER 99, customers are arguing removed after Brexit, allowing lenders to
well the FCA perceives the motor finance the mis-selling of any add-on, whether or not communicate in a more interactive way.
market to be working; the better the it is financed by a regulated credit agreement, The FCA may also look again at
explanation, the lower the risk of action. was done as the lender’s deemed agent. This creditworthiness and affordability. So far, the
is a potentially broad argument, but there FCA has been clear it is very much a matter
Remuneration of sales staff are a number of points to say it is incorrect. for each lender to introduce compliant
There is a clear focus from the FCA around The customer’s argument is that if they processes on creditworthiness and
avoiding mis-selling. While the FCA has not were mis-sold PPI or GAP at the point of affordability. But motor finance is different
banned certain remuneration structures, it sale, but this was not financed by the lender, from other markets. For example, the
has made it clear that firms which incentive the lender is still responsible for the mis- borrower is tied into an agreement for a
sales must have clear policies and procedures, selling under the unfair relationship shorter period than a mortgage, the rate of
and regular audits, to avoid structures provisions. But there are a problems with interest is normally fixed, and (for PCP) the
encouraging bad behaviours. this. For example, if a dealer sells a car seat vehicle’s value is guaranteed at the end.
Many firms are already putting clear which turns out to be unsatisfactory, does But is there any real need for change in the
policies in place to reduce the element of the customer have a claim against the lender motor finance market? The issue is probably
remuneration driven by commission, and where (a) the lender provided no finance to best summarised by Adrian Dally, head of
making sure remuneration is based on a pay for it and (b) it was simply sold to the motor finance at the FLA, who said: “The
number of factors and not just the sales. customer at the point of selling the credit? motor finance industry is committed to
The answer must surely be no. responsible lending and to high standards of
Commission structures The FCA may, however, wish to look at customer service. We will continue to work
Commission structures in the motor finance the selling of add-ons and the extent to closely with the FCA to ensure they have a
market continue to develop. This is both the which (if any) the finance provider has any good understanding of this highly
way structures operate – with many lenders involvement in those sales, or is aware of competitive and diverse market.”
having different models – and includes those products. But whatever views the FCA comes to, it
disclosing the existence of commission to The FCA review is expected to last over a must bear in mind the importance of this
customers. year and complete in 2018 or 2019. We industry to UK consumers. <
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aDDLeshaw GoDDarD
preparing for life after the FCA’s exploratory work
The FCA has been extremely active in its work to better understand the consumer credit sector, and
the recently published FCA 2017-18 Business Plan is essential reading for market participants and
wider interested parties, according to Addleshaw Goddard’s neville Cotton and sarah herbert
into two captive finance houses which solely
support the distribution of vehicles by their
manufacturing partner or parent, and a host
of large and small lenders supporting the rest
of the market.
So what could the FCA’s comments about
the motor finance industry mean for these
different finance providers?
Taking first the captive finance houses. It
is likely that the FCA will seek to establish
whether or not the influence of the
S
ince assuming responsibility for manufacturer is leading to a conflict in will need to ensure that they have robust
regulating consumer credit in 2014, respect of both motor finance product design oversight of the sales practices across a
the Financial Conduct Authority and robust underwriting and affordability multitude of partners.
(FCA) has been extremely active in its work checks, with lending being waived through Both types of finance provider will also
to better understand the consumer credit to support movement of vehicles. have the challenge of in-dealership sales
sector. practices that must demonstrate adherence
This has been demonstrated by a myriad “We are concerned that there to the FCA’s conduct rules. Specifically, they
of consultations, calls for input, thematic may be a lack of transparency, must ensure that the customer is given
reviews and market studies which have been potential conflicts of interest and adequate explanations of the product and be
undertaken, covering a diverse range of able to demonstrate that their sales process is
consumer credit products and business
irresponsible lending in the motor compliant.
practices. finance industry. The FCA is also likely to consider whether
The recently published FCA 2017-18 “We will conduct an exploratory sales processes or behaviours in play are
Business Plan, which sets the regulatory reducing customer choice, particularly where
agenda for the year ahead, is essential
piece of work to identify who uses barriers exist that may reduce the customers
reading for market participants and wider these products and assess the sales propensity to shop around for alternate
interested parties. processes, whether the products funding options.
One of the standout areas of focus for the cause harm and the due diligence More holistically, one would assume that
regulator in respect of the consumer credit the FCA will also want to understand the
sector is that of motor finance, and in that firms undertake before movement from traditional loans toward
particular, whether that area of the market is providing motor finance. PCP products that the consumer may not
working well for consumers. understand.
So, what are the implications for motor
“Following the review we will assess Given the penetration of PCP – particularly
finance providers in the wake of the FCA’s whether and how to intervene in the in the new car market where it accounts for
plan to conduct an “exploratory piece of market.” 86% of the finance market – the FCA is
work” in the motor finance sector? FCA, 2017 likely to question whether it is possible for
The FCA does not make such statements any single product to be suitable for such a
lightly, and we understand that a significant In addition, focus can be expected in the wide demographic.
amount of work has already been conducted use of both term and residual values (RV) in While there are many unknowns in terms
through the use of the multi-firm reviews. setting monthly payments, which while they of how this exercise will play out, what is
As such it would appear that the meet affordability criteria, may lead to clear is that the policies, procedures and
groundwork for this “exploratory piece of unrealistic RV and extended terms. controls – which formed the compliance
work” may have already been completed. The issue of inflated RVs is also a concern frameworks set out in Regulatory Business
However, we are left at this stage to second- for the Bank of England and therefore we Plans to the FCA – are now to be subjected
guess the likely direction of travel, and how can expect this to be an area that attracts to the ‘implementation test’: Have they been
the findings of this activity will be presented further regulatory attention. embedded into the business? And how is
back to the industry. These lenders will need to demonstrate compliance with these being monitored and
Taking the FCA’s recent form into account, that they have considered these risks and tested?
one would envisage a market study or mitigated against them to ensure good Motor finance firms should not only be
thematic review to be the delivery mechanism outcomes for consumers. asking themselves whether their compliance
– and the focus? Conduct. For the other type of motor finance frameworks meet regulatory expectations,
In consideration of how such a regulatory providers in the market, which are subject to but also whether the output from control
review may land, it is important to recognise the same risks as already described above, activities enables us to demonstrate the
that this is far from a homogenised sector. they will have the added challenge of consistent and robust delivery of fair
That said, the market can be broadly divided overseeing diverse distribution channels and outcomes for customers. <
www.motorfinanceonline.com July 2017 y 13
MF 152 July.indd 13 13/06/2017 13:50:59You can also read
