The impact of the current economic and regulatory environment on the Car Finance industry – communication remains key 

The car finance industry is not only having to meet the FCA requirement to ensure a centric approach to all collection efforts set out in Consumer Duty, but it must also consider the impact of the growing UK’s car finance debt against the country’s cost of living crisis which has put household budgets under unprecedented pressure. 

Consumer Duty will increase scrutiny of all debt collection practices, including how you communicate with your customer in a tailored manner that is fit for purpose. It states that company’s must set up systems to ensure that their products support and enable vulnerable customers to disclose their needs at each stage of their process. It needs the organisation to put the customer at the centre of their process to ensure they treat them fairly. One of the monitoring measures will be the outcome of complaints to the Financial Ombudsman (FoS). 

Car finance debt has been accelerating far beyond wage increases for the last 13 years, according to analysis of publicly available data conducted by The Car Expert. From 2009 until the middle of 2022, the average amount of money borrowed on a new car has more than doubled, from £11,964 to £25,039. The total amount borrowed on new cars in the UK is almost £17.5 billion a year – and it was pushing £20 billion a year before the Covid-19 pandemic. 1 

With household budgets under unprecedented pressure from the current cost of living crisis, there is a real risk that a lot of people could simply find themselves in serious financial trouble if they can no longer afford to make their monthly car finance payments. If household bills have gone up by hundreds of pounds a month, finding several hundred to service car finance debt and pay running costs (fuel, insurance, road tax) each month is getting even harder. 1 

It has therefore never been more important to communicate effectively with customers in financial difficulty. Modern Collections systems provide a variety of tools to businesses that enable you to talk to your customer when and how they are most likely to respond. We are now all familiar in our everyday lives with chat bot communication, two-way SMS, and sophisticated customer portals; all have been developed to reflect the behavioural changes in society, which has seen an increasing preference to communicate digitally.  

Optimus by Telrock Systems was designed from the ground up by collectors for collectors, built around leading-edge digital engagement tools. Crucially, all such interactions are automatically recorded in real time, enabling analysis to determine the most effective tools for each portfolio segment. Aside from demonstrating how you meet the requirements of Consumer Duty by putting how you treat your customer at the centre of your operations, such systems are best placed to elicit a positive response from the customer, which in turn can be analysed in terms of kept, sustainable repayment. 

This continually changing economic and regulatory environment requires the ability to make rapid system changes. Optimus provides the ability to change, test and implement without recourse to your internal IT resource - everything is configurable by a business analyst. A cloud native solution designed from the start with integrated portal and digital engagement it operates in real time. 

The current Car Finance environment also requires the ability to connect to multiple services and/or databases in real time. To facilitate and expedite this integration with other systems, Optimus incorporates comprehensive, “no code” integration tool components that can be configured and deployed by client business users instead of programmers/developers. 

Optimus’ flexible, collection system with embedded digital communications, omni-channel management and an integrated self-serve portal is the technology that will enable you to meet the regulatory challenges of today. It is the technology that will put your customer at the centre of your operations.  

1 The Car Expert October 2022