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As the new rules imposed upon consumers and small businesses via lenders by the new Financial Conduct Authority (FCA) start to take affect there is a worrying undercurrent starting to gather momentum. Earlier this year I was in a meeting with directors of one of the biggest lenders in the car finance industry.

Thinking of a change but unsure as to the best way to finance your car? Then you need a copy of my car finance book, Car Finance – A Simple Guide by Graham Hill. Click on the link below to buy the best car finance book on the market, available as a Kindle Book and Paper Back.

I asked what they believed the effect would be of the forthcoming FCA regulations and the rules that had started to filter through. Their response was, at the time, quite dismissive. They pointed out that they had been in the motor finance industry since 1959 and by now they actually knew how to underwrite a customer.

Whilst they weren’t prepared to share actual numbers with me they explained that the amount of delinquency was minimal (that’s the amount of defaults and arrears) and it was certainly manageable so the idea of a Government body telling them what they needed to look out for when underwriting a customer was frankly – ludicrous!

The idea that you needed to carry out some strange affordability tests and have copies of umpteen bills and proofs was simply several steps too far. We all had a bit of a laugh, a cup of tea and a chocolate Hob Nob before moving onto the next item for discussion.

Fast forward a couple of months and that same company is suddenly asking for more information, copies of tax returns, 3 months bank statements and a tree’s worth of paperwork to prove the person is who they say they are. So what has happened? Fines, that’s what has happened.

The lenders who are new to the rules of the FCA have been told that if they don’t tow the line they will be fined – and I mean FINED! Last year the FSA and FCA dished out £472 million in fines, even what many would consider to be minor breaches attracted fines measured in tens of thousands of pounds. So suddenly lenders have had a wake up call and who suffers?

Other than brokers like me, the customers – that’s you! Let me give you an unbelievable example, traditionally lawyers have been extremely low risk applicants as they generally operate as partners which means that all of their personal assets are on the line when taking out finance.

In a recent application, out of 5 partners 4 had houses worth over £1 million and not one had a mortgage, the fifth had a house worth £800,000 with a £200,000 mortgage on it. The company had been trading over 20 years and neither the company nor the partners had a blemish against them.

Perfect you would think. Ohhh no, we even had last 3 months bank statements available showing a balance never less than £70,000 but their year end is September so the last accounts to be completed were for September 2013, which had not been finalised so the last audited accounts available were 2012, too old for the lender, or should I say the FCA when testing for affordability.

The lender then wanted management accounts, which the company doesn’t run. As the senior partner pointed out, they make obscene amounts of money, as explained by their accountants once a quarter, so why would they need to know how much they spent on paper clips or stamps? So no accounts dated within the last 12 months and no management accounts – customer declined.

After appeal we managed an acceptance but with a much larger initial rental to which the customer said no – or words to that effect. The times are certainly changing and in my opinion – not for the better. But the real reason for writing this piece is to warn you if you are due to arrange finance for a new car.

First of all forget the fact that you have had finance before, many funders now ignore that totally, you will be treated as a brand new customer. Make sure that you prepare for finance as I explain in my book, Car Finance – A Simple Guide (available on Amazon), make sure that your last 3 months bank statements are looking good and if they don’t, wait till they do and make sure there are no returned (bounced cheques/direct debits) items on the statements, that would be a straight decline.

logo of FCA (Photo credit: Wikipedia)

Get a copy of your credit report and see what it says, make sure there are no mistakes on there, it is simple enough and that extra bit of preparation could be the difference between getting a car or not. Oh and use a proper broker that can make sure that he can help you along the process, you often only have one shot at finance so don’t let a bucket shop blow it for you. By Graham Hill

Whilst customers make lease decisions based on headline rates and will argue over 50pence per month there is increased pressure on dealers to save money in order to provide reduced on the road costs. One of life’s irritations for me and some customers is the removal of carpet mats from the standard spec of some executive cars in order to reduce costs.

Thinking of a change but unsure as to the best way to finance your car? Then you need a copy of my car finance book, Car Finance – A Simple Guide by Graham Hill. Click on the link below to buy the best car finance book on the market, available as a Kindle Book and Paper Back.

The problem then is – do you go to the main dealer and pay up to £180 for a set of mats or nip down to Halfords for a set of one size fits all mats at less than a quarter of the price but with the Halfords mats not fitting as well as the manufacturer’s tailored mats? The answer is neither. A company called Richbrook have brought out a range of tailored mats to fit more than 17,000 models of car.

Buyers can select from a range of colours, patterns, piping and textures to match their car. The range also includes 3mm thick rubber mats. All mats come in a set of 4 and are finished with a backing of abrasive rubber to prevent movement. Model specific fixing points can be added if required. The cost just £39.99. You can see them online at www.richbrook.co.uk Definitely my product of the week. By Graham Hill

Last week I was thumbing through the latest edition of Credit Today, one of the journals I always try to read more thoroughly than any of the others, not only because it has a fairly good handle on the industry but also because a very good friend of mine, Fred Crawley, is the managing editor.

Thinking of a change but unsure as to the best way to finance your car? Then you need a copy of my car finance book, Car Finance – A Simple Guide by Graham Hill. Click on the link below to buy the best car finance book on the market, available as a Kindle Book and Paper Back.

So I was disappointed to see that a round table event had been held without my presence. I was more disappointed about the comments of the good and the great in the industry.

Motor finance currently runs at a massive £28 billion per annum and not only accounts for a slice of profit earned by the dealers but more important, and often overlooked, is that finance contributes heavily towards the sales of new cars, making it possible for consumers and small businesses to afford new cars rather than used cars.

The thrust of the debate was the effect of the new Financial Conduct Authority (FCA) regulations and the effect on the industry. Virtually everything that was raised was to do with us, being dealers or brokers and them, being the lenders. There was a complete dog’s dinner of comments, speculations and suggestions but guess what?

I couldn’t find one sentence that mentioned the potential problems to consumers and small businesses. There was a lot of sympathy and even empathy for the lenders but what about the bloody borrowers. Why is it that the Government, and virtually all of the consumer and small business finance industry, walk around with their heads firmly planted in their jacksys?

They continue to make bold statements, explaining how they are setting out to protect consumers and SME’s but when you want to finance a replacement fridge, TV, car or essential equipment for your business how does it help when the lender explains that you have failed the new FCA imposed affordability test?

And where will all this leave the economy, it’s a sad fact of life that when people borrow money from a payday lender they often need it for essentials or some sort of an emergency like the freezer breaking. Either way the money doesn’t sit around in a bank account – it is spent which continues to help the recovery.

Creating barriers to lending will flatline the economy and could send us back into recession. We are in sensitive times, we need finance to keep the economy moving forwards but I seem to be a lone voice in the wilderness. Only time will tell, lets hope that common sense prevails and lenders continue to do what they do best – lend bloody money! Rant over! By Graham Hill

Currently when you reach the age of 70 you have to renew your driving licence. However, according to the Department for Transport this should be extended to the age of 80 in order to reduce DVLA costs and make it more efficient.

Thinking of a change but unsure as to the best way to finance your car? Then you need a copy of my car finance book, Car Finance – A Simple Guide by Graham Hill. Click on the link below to buy the best car finance book on the market, available as a Kindle Book and Paper Back.

Following a review, on behalf of the Government, the DfT concluded that we should change the rules to bring the UK in line with Europe who already have a renewal age of 80. At present there are over 4 million motorists over the age of 70 which represents a substantial amount of administration at renewal time, so by extending the renewal date the admin costs will be cut significantly.

But safety campaigners object to the proposal on the grounds of health and safety. In fact they suggest that there should be increased controls on the elderly not less which could cost lives. I don’t agree, not least of which as I am edging my way towards 70 I don’t really want to have to renew my licence.

Department for Transport (Photo credit: Wikipedia)

On the other hand the government could take the savings and fix a few more potholes which would prevent many more accidents than extending the licence renewal dates! By Graham Hill

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• Cost-cutting Coalition to let pensioners drive till they’re 80 without renewing licence (mirror.co.uk)

How safe do you feel driving to work on a Monday morning? If the statistics produced by swiftcover.com are anything to go by you should feel less safe than any other day of the week. According to their 2013 claim data drivers were more likely to have a driving incident resulting in a claim on a Monday (17%) than any other day of the week.

Thinking of a change but unsure as to the best way to finance your car? Then you need a copy of my car finance book, Car Finance – A Simple Guide by Graham Hill. Click on the link below to buy the best car finance book on the market, available as a Kindle Book and Paper Back.

You are 36% more likely to have a windscreen claim on a Monday than any other

A car crash on Jagtvej in Copenhagen, Denmark. (Photo credit: Wikipedia)

day, their statistics showed that the average was 10,000 on a Monday compared to the daily average of 7,922. Monday also sees a rise in single vehicle incidents, i.e. a car that hits a bollard or lamppost with no other vehicles involved. So what are the reasons for this higher number of incidents on a Monday?

Maxine Tighe, head of motor claims at swiftcover.com, suggests that it is the result of bleary eyed motorists recovering from the weekend and trying to get back into work mode lacking concentration. They found that whilst Monday was a bad day for single vehicle collisions Friday was the worst for multi-vehicle collisions as people dash home for the weekend, especially during the rush hour mayhem.

The weekend is safest as there are fewer cars on the roads. On the other hand loss of keys, vandalism and theft all rise on a Saturday and Sunday as cars are more at risk parked outside homes. How very very interesting swiftcover.com! Yawn!

Whilst catching up on some of the stranger things to come out of the budget I noticed that the pound coin is about to change. Well when I say ‘about’ I mean in 2017 when it will be launched. I have seen the design and if you are as old as me you will immediately think of the thrupney piece.

Thinking of a change but unsure as to the best way to finance your car? Then you need a copy of my car finance book, Car Finance – A Simple Guide by Graham Hill. Click on the link below to buy the best car finance book on the market, available as a Kindle Book and Paper Back.

It’s the usual bronze colour but it has 12 sides and has been described by the Rotal Mint as the most secure in the world. However the new design comes at a cost as all vending machines will have to be modified at a cost. According to the British Parking Association, the cost to local authorities of the modification to their parking metres will be £50 million alone.

However, they also said that this will give the authorities the opportunity to upgrade their machines to also accept credit/debit cards at the same time. The move has been instigated by the Treasury because 4% of all £1 coins in circulation are counterfeit and this is already costing local authorities a fortune as banks refuse to accept them.

Personally I’m confused as I can’t see that making the £1 coin 12 sided makes it any less capable of being replicated. If there was some hidden ingredient in the metal that made it detectable I could understand it but it’s a lump of metal that has either been stamped out or forged (that’s metal forged not as in illegally forged – oh you know what I mean).

Royal Mint X Mirai Suenaga (Photo credit: Danny Choo)

So I can’t see how it will stop the crooks? Obviously the Royal Mint knows more about these things than me! By Graham Hill

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• Forging into the future: Royal Mint is combining history with technology (dailymail.co.uk)

Flooding on our street (Photo credit: jessicafm)

We saw the sad pictures on TV following the floods in various parts of the country. People’s homes were wrecked with thousands of pounds of damage caused to furniture and possessions.

Thinking of a change but unsure as to the best way to finance your car? Then you need a copy of my car finance book, Car Finance – A Simple Guide by Graham Hill. Click on the link below to buy the best car finance book on the market, available as a Kindle Book and Paper Back.

But what about all the cars we saw up to their bonnets in muddy water. Many would be subject to insurance claims and be paid out with a large number being written off according to the AA. And if a car is written off they are subjected to some very stringent rules before, if ever, they are allowed back on the road.

But it would seem that many drivers either didn’t make a claim or couldn’t because their policy didn’t cover them for flood damage. They simply dried the car out, maybe changed the carpets and have been selling them privately or through auction, possibly ending up on dealer forecourts.

Amazingly 70% of all cars that have been submersed in water are written off due to engine damage or electrical safety problems. Water can also seriously damage air bags and catalytic converters, something you may not notice when buying a used car. So be very careful if you are buying a used car, you might find yourself buying an ex flood damaged car. By Graham Hill

GoCompare.com have analysed 6 million quotes to find out which occupations were most likely to make insurance claims only to find that at a shuddering 44% of healthcare workers were by far the most likely. The conclusions were based on analysis of 2013 figures and resulted in a top 50 of professions most likely to make an insurance claim.

Thinking of a change but unsure as to the best way to finance your car? Then you need a copy of my car finance book, Car Finance – A Simple Guide by Graham Hill. Click on the link below to buy the best car finance book on the market, available as a Kindle Book and Paper Back.

Next with a meagre 16% were professionals (this includes chartered surveyors and engineers). With the same percentage but in 3^rd place was Finance (advisors and accountants), followed by Local Government (town planners) with 12% and Legal at 5^th (probation officers/solicitors) with 8% making claims.

Of the medical profession it was GP’s most likely to make a claim with 28% making a claim in the last 5 years. That is nearly twice the national average of 13.1%. In the top ten list of jobs 8 were in healthcare with nurses, dentists and psychologists featuring highly. Professor Andrew Smith at Cardiff University, expert on occupational and health psychology, said that the stressful nature of healthcare no doubt made it top and added, ‘Stress can cause drivers to become clumsy and absent minded at the wheel.’

Many of the claims were the result of minor lapses in concentration brought about by stress and resulting in relatively minor bumps. Surprisingly car dealers had the best record of all with just 3% having made a claim in the past 5 years. Having said that, like all statistics, they aren’t all as they seem, having had Trader Insurance myself in the past it costs a fortune because it allows all named drivers on the policy to drive absolutely any car with maybe one or two restrictions.

But to get the premium down we took an excess of £1,500 so if any damage was under £1,500 we wouldn’t claim but simply pay for the repair. Even if the repair was a little more we still wouldn’t claim because the no claims discount was worth a fortune. So car traders aren’t any more responsible drivers than healthcare workers, it’s just that the costs were in favour of paying for the repair rather than making a claim.

However it doesn’t explain why a motor dealer would be quoted more for insurance if taken out in his own name than a GP! Something wrong there – or is there? By Graham Hill

Something else I write about far too often is warranty claims. Dealers continue to let down customers and drivers know too little about their legal rights and don’t do things that would help their case. A lady had a Toyota that she bought second hand but found shortly after that the alarm constantly and randomly went off whilst parked on her drive.

Thinking of a change but unsure as to the best way to finance your car? Then you need a copy of my car finance book, Car Finance – A Simple Guide by Graham Hill. Click on the link below to buy the best car finance book on the market, available as a Kindle Book and Paper Back.

She returned the car whilst covered by the warranty but the dealer couldn’t replicate the problem so refused to accept that one existed. The problem continued and the car was returned, still no joy as the dealer effectively called the lady a liar.

The fact is that I have an extremely small amount of sympathy for the dealer as faults can often be intermittent so with modern technology why didn’t the lady take a video of the car with the alarm going off to show that it happened.

Or take a letter from a neighbour explaining that the alarm continued to sound without anyone touching the car so at least she can speak with some authority. My sympathy ended when I read that the dealer refused to continue checking the car for the fault after the warranty ran out.

As I have said time and again your legal rights don’t end the day your warranty runs out. Alarms should function properly for the life of the car so if it is faulty when you buy the car from a dealer there is something wrong with it and the supplying dealer needs to fix it or give you your money back. If you are not satisfied get the manufacturer involved and also advise the Office of Fair Trading.

In the case of the lady with the Toyota the manufacturer arranged to have the car looked at and turn down the sensitivity level on the alarm which fixed the problem. Unbelievable! The manufacturer needs to address the incompetence of its franchised dealer. The good news is that I am now working closely with several manufacturers  as a consultant and this is an area that will be addressed as part of my shake up of the industry. By Graham Hill

Talking about Nissan and their love of cameras they have just launched at the Geneva Motor Show a smart rear view mirror. It replaces the glass with an LCD display.

Thinking of a change but unsure as to the best way to finance your car? Then you need a copy of my car finance book, Car Finance – A Simple Guide by Graham Hill. Click on the link below to buy the best car finance book on the market, available as a Kindle Book and Paper Back.

In normal use it acts as a normal mirror but it can be switched to project a view from a rear view camera instead. This gives a clearer view behind especially when it is dark or raining. It also lets you see behind even when the driver’s normal view is impaired by a load that they can’t see by. Another clever idea. By Graham Hill

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