Dealerships risk a halt to their car loans provision in 2025 if they’ve not put staff through the Specialist Automotive Finance accreditation programme, warns Lisa Watson, sales director at Close Brothers Motor Finance.
Following a busy summer, few of us will want to think ahead to the winter months, let alone to the new year. But looming on the horizon is an event which is too important to ignore. This comes in the form of an FLA mandate.
From January 1, 2025, this means that independent dealers have to make sure they are Specialist Automotive Finance (SAF) approved, or they won’t be able to continue arranging finance through lenders that are members of the Finance & Leasing Association.
We know that dealers remain either unaware of the date they need to become SAF approved itself, or don’t have any idea how to become approved. Recent research we conducted with motor dealers, as part of our Forecourt Foresight campaign, found that as many as a third of dealers remain unaware of SAF.
Yet failure by dealerships to comply with this regulation could lead to dire consequences for their businesses.
If the deadline is missed, the door to working with lenders who are members of the FLA – which is most of them – will swing shut. According to Go Compare research last year, 40% of buyers pay for their cars on finance, so this could really limit your customer base.
But as long as dealers are aware of when and how to become accredited, the opportunity is a very good one. This mandate offers an opportunity to radically improve outcomes for dealers and customers alike.
What is SAF?
SAF was originally introduced in 2007 as a way to improve standards in terms of dealers’ knowledge of financing.
After a 2019 report into the use of motor finance products revealed that there was significant room for improvement around the sales process involving the use of finance products, it was decided to make SAF a mandated accreditation for all independent used vehicle dealers, meaning any dealer who wishes to work with lenders who are members of the FLA must become SAF approved from 1 January 2025.
Critically, all customer-facing staff will need to pass the SAF Expert test for the dealership to become accredited.
From a business perspective becoming SAF-approved is vital, but the accreditation comes with further benefits. It improves team members’ understanding of vehicle finance products and helps develop expertise and answer customer queries confidently. Teams’ knowledge of industry compliance and regulations are also improved, and customers can be confident that they’re dealing with a reputable dealership.
How do you become accredited?
The accreditation process is relatively straightforward, but time is ticking for dealerships to get their staff over the line.
It involves staff taking a 60 minute test involving 60 questions. Questions range across technicalities on finance products and regulations around the provision of these products.
Dealerships must register with SAF Expert and enter the number of customer-facing staff they have – all of whom will need to take separate tests, and will have three attempts each to reach the 75% pass mark.
Once tests have been passed, the dealership must complete a statement of compliance and send it to the FLA, who will in-turn award the SAF-approved status. Staff will need to retake the test once a year for the dealership to retain its SAF-approved status.
Our view
While we understand dealer concerns in terms of the growing admin and regulatory burden, in this instance it is important. SAF-accreditation will improve outcomes for customers on an industry-wide scale, and help dealers in the long run.
Getting the right outcomes for them works to strengthen the relationship between customers and car dealerships in a number of ways.
Firstly, with dealers equipped to know which products are right for which customers, the logic follows that there will be fewer defaults and a more streamlined process of loan repayments, which is definitely better for the customer.
Secondly, the heightened trust in the expertise and knowledge of the dealer improves customer loyalty, and encourages people to return to the same forecourts.
This is especially important as we approach October and an Autumn Statement from the Government, which may have serious repercussions for motorists, including the possible introduction of a pay-per-mile road tax system. With further pressure on motorists’ purse strings a likely possibility, providing the right finance packages at dealerships will be imperative.
And finally the enhanced knowledge, gained through SAF, of governmental regulations is critical so that dealerships can avoid mistakes at point of sale that can lead to real problems later.
So with January 1st looming, the sooner motor dealers take steps to get accredited the better. Register your company for SAF here.
Author: Lisa Watson, sales director, Close Brothers Motor Finance