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Preparing for Consumer Duty: Understanding Vulnerability in Car Dealerships

Updated: Jun 9, 2023

With the new Consumer Duty regulations due to come into force on the 31st of July 2023, car dealerships are gearing up to tackle a significant challenge. This new principle and rules require a profound understanding of vulnerability, not just at an individual customer level, but also at a dealership-wide level if Consumer Duty is to be implemented effectively.

Consumer Duty isn’t simply another requirement to fulfil, but an integral element of dealership operations. This regulatory requirement is designed to safeguard and promote the interests of consumers, with a special emphasis on those in vulnerable circumstances. Recognising and addressing vulnerability is now more critical than ever, not just for the purpose of delivering an exceptional customer experience, but also for achieving and maintaining compliance with the latest regulations.

Vulnerability is a complex issue and understanding it in depth is key to any dealership's success under the new Consumer Duty regulations. But what does it truly mean to understand vulnerability? Let’s delve deeper to grasp the intricacies of this concept.

Vulnerability – More Than a Designation

In the context of the automotive industry, we refer to vulnerability as situations where customers, due to their unique circumstances, might be at a disadvantage when engaging with the marketplace. These circumstances could range from financial stress, difficulty understanding complex automotive and financial jargon, language barriers, or a wide array of unique life situations.

However, simply designating someone as vulnerable isn't enough. And there are nuances within – temporary versus permanent characteristics. To truly understand vulnerability means to explore the distinct characteristics of each customer's situation. For instance, in one dealership, a customer whose first language isn't English struggled with the intricate terms of a car finance agreement. In another dealership, a customer might be facing with an unexpected financial hardship, creating uncertainty about managing an existing car loan or another financial product.

The Impact of Understanding Vulnerability

By recognising these individual characteristics of vulnerability, dealerships can tailor their actions to ensure these customers are not unfairly disadvantaged, whether inadvertently or caused by inadequate training and processes. In the first dealership, this could mean providing multilingual customer service to facilitate better understanding of the finance agreement. In the second dealership, this could involve offering flexible payment solutions to support their temporarily financially-challenged customers.

Understanding vulnerabilities at the dealership level also calls for adapting broader operations and communication methods. Whilst this is a general requirement of Consumer Duty – with the “layering” of information – for vulnerable customers, this might involve simplifying communication about the finance contracts, offering training to your staff on empathetic communication, or implementing new processes for monitoring and supporting vulnerable customers.

By doing so, you aren't just adhering to the principles of Consumer Duty, but also fostering a more inclusive, customer-centric dealership environment.

Practical Steps to Understand Vulnerability

Here are a few pragmatic steps to begin understanding vulnerability in your dealership:

  1. Develop a Vulnerability Framework: Establish a framework for identifying, understanding, and addressing vulnerabilities. This involves understanding your customers, their unique circumstances, and how these might affect their interactions with your dealership.

  2. Educate Your Staff: Incorporate vulnerability training into your staff development programmes. Ensure your team can recognise signs of vulnerability and are equipped with the tools and empathy to provide the right support.

  3. Refine Your Communications: Ensure all your communications are clear, transparent, and easily understandable. This could mean simplifying the terms and conditions of your agreements, ensuring marketing materials are straightforward, and training your customer-facing staff to explain complex concepts in simple terms.

  4. Monitor and Review: Regularly review your policies and procedures related to vulnerability. Gather feedback from customers and staff and adjust your approach as necessary.

By understanding and addressing vulnerability, your dealership isn't just aligning with Consumer Duty, but also creating an environment where all customers feel supported, respected, and valued. In the competitive motor trade market, that's a level of service that can truly set you apart.


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