1/3 of Car Buyers are Being Mis-Sold Finance & Insurance Products

car park

Nearly half of drivers don’t trust a car salesman after being over-charged and mis-sold finance and insurance products when buying from a dealership.

Research from the Institute of the Motor Industry (IMI), the professional body for the automotive sector, has found that finance and insurance (F&I) products are added to 60% of all car purchases. However 45% of drivers said they felt pressured by a salesman to buy add-ons when they most recently bought a car from a dealership or garage.

The Financial Conduct Authority (FCA) has implemented changes to the Consumer Credit Act which aims to stop drivers being mis-sold finance and insurance products. Yet 42% of car buyers said they had avoided a dealership due to the lack of trust.

According to the IMI research this mis-trust could be avoided, with 64% saying buying a car would be easier if the people they were buying from were members of a regulated body. Over half said they would feel more comfortable making financial decisions relating to a car purchase if additional measures were in place to ensure they weren’t overcharged.

Steve Nash, Chief Executive at IMI, said: “Sadly our research highlighted that nearly two thirds (63%) of car buyers find the process stressful. This underlines why it’s the right time for the retail motor industry to take more responsibility to ensure anybody selling finance and insurance products has the correct training to be able to help drivers decide whether or not they would like to buy these extras when purchasing a vehicle. The IMI F&I Accreditation helps safeguard customers by ensuring the salesman is giving accurate and truthful information. It also gives the car salesman the knowledge to be able to identify which products, if any, are suitable for that individual customer. This training is just one step further in ensuring the industry is providing a good quality and honest service.”

Sabina Hegarty, Managing Director at Calibre Group Solutions, said: “It’s clear from the research that perception of our industry continues to be a barrier for customers. The only way to change this is to ‘improve from within’ by developing and upskilling our people to ensure the advice they give is fair, transparent, consistent and in the best interest of the customer. Savvy shoppers of today are looking for more than just a good price. Knowing that staff in a particular retailer carry additional and ‘voluntary’ IMI F&I Accreditation might be what sets them apart from their competitors and could make the difference between winning a new customer or not. F&I specialists on site need to actively improve their approach, leading to better customer satisfaction and ultimately resulting in greater consumer confidence. It certainly won’t happen by itself.”

The new IMI F&I Accreditation guarantees customers are dealing with an individual who has signed an ethical code of conduct and is working in line with FCA and IMI regulations.

IMI Finance & Insurance Accreditation

The IMI’s new accreditation route for finance & insurance has been developed in conjunction with industry expertise, and is available via IMI’s network of approved centres.

It is aimed at professionals in customer-facing motor industry roles who are responsible for selling finance and insurance products to consumers. The accreditation enables individuals to demonstrate their current competence and professionalism via knowledge tests, for both ‘finance’ and ‘insurance’, and practical assessments including role plays.

IMI research highlights:

– 60% bought F&I products or services when buying a car
– 45% felt pressured to buy add ons/additional extras
– 33% felt they had been over-charged when purchasing a car and/or insurance
– 53% said they would feel more comfortable if measures were in place to not be over charged
– 75% felt they couldn’t trust a car salesman
– A car salesman is the 3rd most untrusted profession
– 37% were more likely to take out F&I products/services if the dealership was accredited by an industry body
– 64% felt buying a car was a stressful process
– 64% buying a car would be an easier process if drivers were buying from were a regulatory body
– 42% avoided a car dealership due to lack of trust

Source: Institute of the Motor Industry