SINCE the Financial Conduct Authority took over regulation of the leasing sector, we have seen many benefits, writes Richard Chadwick (left), head of Alphabet Partner, Alphabet (GB).
From process management to customer satisfaction, brokers have been provided with a better understanding of what is expected of them and clear guidelines on how to remain compliant. In particular, the FCA’s ethos of ‘Treating Customers Fairly’ has become central to broker operations. With the majority embodying this, we have seen standards boosted across the industry.
And this is why, at Alphabet, we have hand-selected an exclusive group of just 50 partners across the UK to maintain the highest standards for our customers. Ensuring every customer receives the best experience each and every time they interact with us is crucial and we want to make sure our brokers are upholding these same values.
Know your customer
A key part of putting the FCA ethos into practice is knowing your customer. Part of the assessment brokers must make when working with a customer, is that they can afford the vehicle in its entirety. This requires more than simply considering the monthly or initial rental; the upkeep and maintenance of the vehicle must also be taken into account to establish the total cost of ownership (TCO). Therefore, selling contracts with maintenance included can help brokers meet FCA requirements, making maintenance penetration a beneficial option for everyone.
For customers, a full maintenance package can deliver a holistic service and enable them to factor in the TCO upfront, with the guarantee that their vehicle will be regularly maintained to a high standard throughout its lifecycle. This in turn reduces the chances of breakdowns and accidents, which also provides assurance for fleet managers in line with their duty of care obligations. For leasing companies, a properly maintained vehicle will also be beneficial when it comes to remarketing.
At Alphabet we reward our partners generously for the sale of maintenance. But some continue to overlook the opportunity. Feedback suggests this may be due to the misconception that a sale is less likely if a fully maintained, and therefore seemingly more expensive, quotation is proposed.
Partners not selling maintenance will lose pricing advantages
Being an Alphabet Partner allows brokers to take advantage of good pricing models, with the expectation that they will aim to do the best business possible, including sale of maintenance packages, where appropriate for the customer. We have been open that pricing has always been dependent on a certain level of maintained business. Those not selling maintenance, have so far been subsidised by the partners that are excelling in this area, creating an imbalance and unfair system. This way of operating has become unsustainable. As such, partners not upholding their agreement on maintenance penetration will no longer benefit from some of the advantageous pricing models we offer.
A maintenance package is more than just an important option for customers to be made aware of; it also falls within a broker’s responsibility under FCA guidelines to ensure a customer can afford the vehicle they are purchasing – as there will inevitably be maintenance costs during a vehicle’s lifecycle and these can sometimes be significant and unexpected.
Maintenance must form a crucial part of any conversation with a customer and should be included from the very start of the journey into a new leasing contract.
It enables customers to understand their full financial obligation and will likely save them money in the long run. For non-regulated customers, there’s also the benefit of 100% VAT reclamation against the maintenance rental.
Alphabet customers who have fully maintained contracts, enjoy a better overall experience and we believe service and assurance should be the focus of our sales – not just the price of a vehicle.
We expect all our partners to reflect these goals and values.