With motor financing now under the Financial Conduct Authority microscope, Black Horse is in a great position to demonstrate how it is supporting dealers to put the needs of their customer first. ​

The UK’s industry regulator, the Financial Conduct Authority (FCA), has been looking closely at the motor finance sector over the past year to make sure dealers use fair processes to sell motor finance to customers.

The regulator’s growing interest is not surprising given the huge growth seen within the sector in recent years. Indeed, in 2017 the Bank of England estimated that car financing had increased by an average of 20% a year since 2012 (PDF, 1MB).

The FCA review has included engaging with lenders, analysing customer credit reference agency files and looking at agreements between lenders and dealers – as well as the sales practices and processes of various firms. Its initial findings in March 2018 noted that, despite favourable economic conditions and motor finance arrears and default rates remaining quite low, these instances are rising among ‘high credit risk’ consumers. This suggests that lenders may need to consider how they assess affordability.

The FCA also identified that some types of commission arrangements may be acting as an incentive for dealers to arrange finance at higher interest rates for their customers. So, they are reviewing how this process is currently managed by lenders.

Finally, the regulator is conducting a series of mystery shopping exercises. It is reviewing the typical customer journey and exploring whether car buyers are being given the information they need to make genuinely informed decisions.

Seeing the benefits of transparency

At Black Horse, we fully support the FCA’s review. We believe it will demonstrate the value of motor finance to customers and build on the great work that’s already been done in the industry to improve the transparency of this product.

Our customers deserve to be treated fairly and to be given accessible, easy-to-understand information. But we also know it makes business sense; car dealers know that this level of transparency actually improves their image and supports customer retention. They also know that selling products to customers who can’t afford to repay them is an unsustainable commercial model.

When the FCA took over the regulation of consumer credit in 2014, we embraced this regulatory shift with its focus on delivering good customer outcomes and placed it at the heart of everything we do, every day. We did this by implementing our ‘roadmap’, a strategy that continues to this day to encourage our dealers to treat their customers fairly.

Now, four years on, we’re well-placed to answer the questions the FCA is asking of the motor financing industry:

  1. Are firms taking the right steps to ensure they lend responsibly, in particular by appropriately assessing whether potential customers can afford the product in question?
  2. Are there conflicts of interest arising from commission arrangements between lenders and dealers, and if so, are these appropriately managed to avoid harm to consumers?
  3. Is the information provided to potential customers by firms sufficiently clear and transparent, so they can understand the risks involved and make informed decisions?

    The FCA is due to publish its findings and plans for tackling any areas of concern by the end of September 2018. We believe this will drive further positive change in the sector. At Black Horse, we look forward to the outcomes of this FCA review so we can benchmark our strategic approach. By increasing transparency and putting the interests of our customers first, we can boost customer confidence in the motor finance sector and improve its sustainability.

How is Black Horse placing customers' interests first?

Thanks to the journey we began back in 2014, Black Horse has already gone a long way towards improving services for our customers.

Making sure customers can afford the finance for the vehicle they’ve chosen is our priority. We’ve achieved this by:

  1. Implementing a robust affordability assessment within our finance application process which is easy to use for the customer and the dealer.
  2. Creating our own bespoke Black Horse Dealer Dashboard, to give dealers enhanced management information to help them track measures around customer affordability, product suitability and finance pricing. 
  3. Introducing a Credit Indicator for our customers to check their credit status and identify if it is likely they will get the finance they need. This helps customers to shop around without leaving a mark on their credit file for other lenders to see. 
  4. Offering modules on affordability and sustainability to our dealer staff through an online LetsULearn training programme. It can also deliver training in soft skills. We support our dealers and their employees with training on regulated sales processes and our products so that they can deliver these to our customers.


We’ve also been proactive at Black Horse about improving the way our customers are given information so they understand our products and can make informed decisions. Here are some of the tools we’ve developed to do this:

1. A mobile finance calculator, so our dealers can create instant indicative PCP or HP quotes for customers. By showing the customer the full cost of finance, we can help them make informed funding decisions.

2. A customer contact programme, where we ask the customer about their experience at the dealership, usually within 48 hours of them signing their car finance agreement. Account Managers share this feedback with dealers so they can review and improve the customer experience and ensure they’re delivering transparent, compliant financial guidance.

3. Black Horse product videos that dealers can embed on their website to help customers understand their finance options. 

4. A personalised welcome video that is sent to the customer after they’ve purchased a vehicle using Black Horse finance, which provides important information about their finance contract.

5. Financial promotions guidelines for dealers to help dealers produce compliant advertising for their customers.

6. LetsULearn, which provides online training for dealer staff on product suitability and how to explain our products to their customers.

At Black Horse, we understand the value of being proactive and investing in sales tools and training for our dealers. And we remain committed to this focus, so our dealers can continue to offer their customers a seamless financial experience now and in the future.