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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.

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

I was quite shocked to read that crooks no longer need to break a window to get into your car and forget about the tea leaves that  break into your house to nick your car keys along with the family silver and the contents of your fridge.

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.

Apparently the new techie toe rags can get into your car in less than 10 seconds with a computer or special gadget. Software or special gadgets that you can buy online fool your car’s computer that a smart key is present or it can be plugged into the car’s ECU to produce a ‘blank key.’

Not quite sure how you do that without breaking into the car in the first place? Anyway, it would seem that 47% of all car thefts in London last year were carried out using this method. That’s 9,870 out of 21,000. But the worst is yet to come.

When the police were asked how this type of crime could be prevented their only suggestion was to have a Thatcham approved tracking device fitted which operates separately to the ECU enabling the police to track and recover. Is that it? No fancy blocking device or an alarm that senses when an outside device is connecting to the ECU that isn’t approved? A bloody tracker!

What good is that after the event when some thief has driven your pride and joy like a bat out of hell for 5,000 miles? Worrying – very worrying! As a PS I have found out that manufacturers are more than aware of the problem and are addressing it – so there you have it.

Many years ago, when my namesake was racing cars I watched a demonstration by one of the F1 drivers showing how to avoid a skid by rapidly tapping the brake pedal. The driver applied and released the brakes in quick succession which gave greater control as the tyres moved round increasing the grip and avoiding a skid.

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 is the principal that developed into what has now been used for many years called ABS. Thousands of lives have been saved as a result of the fitting of ABS to all cars but now Thatcham have called for the latest brake development to be added to ABS and ESP as standard requirements on all new cars.

The new system known as Autonomous Electronic Braking (AEB) is already available or fitted to 23% of all new cars but Thatcham feels that more should be done by the Government to encourage the fitting of this technology by offering a £500 incentive to drivers that have it fitted.

Thatcham claims that the device would save 1,220 lives over 10 years and reduce casualties by 136,000. So what is AEB? It detects vehicles in front and applies the brakes in an emergency in time to prevent a front to end accident. In the more sophisticated systems the ‘radar’ can detect pedestrians and cyclists as well as solid vehicles.

At the moment if the system is fitted to a company car this will increase the driver’s benefit in kind tax and class 1A National Insurance Contributions, this is wrong according to Thatcham as the device is as much for the benefit of those outside the vehicle as inside.

Thatcham have shown that with AEB third party injury claims drop by 18%, whilst studies in the USA have put the reduction at 26%. Amazingly in Switzerland and Sweden front to rear crashes would drop by 31% and 48% respectively.

Whilst I have seen various claims relating to the benefits of AEB it is clear that this technology, if fitted, could save lives so I’m behind Thatcham and hope that they can convince the Government to do something to encourage the fitting of this life saving technology.

It might also help to prevent some of the crash for cash insurance claims so maybe the insurance companies should contribute something. Just a thought!

Related articles

• New AEB brakes ‘safer’ for cars (bbc.co.uk)

Oh dear, I once again find myself disagreeing with the self promoted ‘Motoring’s most outspoken and opinionated colomnist’ Mike Rutherford. This time over electric cars. He has described 100% electric cars as ‘stillborn’.

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.

He has written a rather amusing article in which he goes head to head with Richard Bruce who is the head of the Office for Low Emission Vehicles (OLEV) over the reasons why we should persevere with electric vehicles(EV’s). Quite naturally Mr Bruce is heavily in favour of EV’s as without them his job pretty much becomes meaningless so of course he is in favour.

Mr Rutherford’s point is that they are expensive and you can’t cover more than 100 miles in one charge, both of which are reasonably true – at the moment. But not everyone needs a car to cover more than 100 miles in a single trip and for those that do there will come a time when cars will be able to cover over 1,000 miles with a single charge.

Look, I’m not a huge fan of electric cars but I’m not going to suggest for one minute that after spending £millions if not £billions in research that we should simply throw out the idea and revert to fossil fuel vehicles or mixtures of fossil fuel engines and battery power packs. That Mr Rutherford is simply dopey!

And don’t forget this is electricity we are talking about – just think back to the days of Thomas Edison, it only takes one experiment to solve the problem even though it may have taken hundreds of experiments previously. With what I have read and reported upon we are rapidly moving closer to the point where cars can cover several hundred miles on one charge, chargers can charge very rapidly and as volumes grow prices will tumble as a result.

Even now we can provide a Nissan Leaf, after allowing for the Government grant for less than £200 + VAT per month on a car that costs over £21,000. My money is on Mr Bruce and whilst he is very protective about EV’s I believe he has a good point and for many drivers EV’s represent the future so go off and have a whinge about something else Mr Rutherford. Don’t you just hate these people that can only moan and groan about things! By Graham Hill

As you know I like a funny story and this one made me smile. A young lad of just 17 years his age had a rather sporty looking Corsa which he had fitted with a Carrot telematics box, as required by his insurance company, in order to bring down the cost of insurance. The black box measures his driving style, speed, acceleration and smoothness and adjusts his insurance cost accordingly.

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.

Unfortunately the young lad was devastated to find that his pride and joy had been stolen from outside his place of work in Oldham. However, the black box is also fitted with GPS which pinpointed the location of the car which the police managed to locate a couple of hours later and to the driver’s delight the car was in perfect condition other than a broken window.

However, his concern next turned to his black box, knowing that the car was probably stolen by joyriders and could have seriously damaged his driving score, escalating his insurance through the roof. Having contacted Carrot they found that during the two and a bit hours during which the car had been stolen the thief scored a perfect 10, the first time since this young driver had taken out his insurance.

The even better news was that Carrot allowed him to keep the score which will contribute to his overall score for the year. Brilliant news but I have news for you mate – it was probably your dad who nicked the car! It also suggests that if you are a young driver with one of these black boxes fitted, let your mum or dad drive your car occasionally, it could dramatically improve your score and reduce your insurance costs. By Graham Hill

If you are a Formula 1 team boss you will be spending small fortunes to squeeze a little extra out of your cars in order to win races. The component parts they spend most time developing their cars around are the tyres whilst, at the same time, the tyre manufacturer providing all the tyres to the teams, is looking at ways to improve grip and thereby handling whilst reducing drag.

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.

Tyres are a very critical part of an F1 car and with the new limits on the amount of fuel you can start a race with the tyre manufacturer has also to consider fuel consumption. But what does all this mean to the likes of you and me?

If you are anything like me, when you need a couple of tyres, you search the Internet for the cheapest premium brand with little regard to the characteristics of the tyre and whether the tyres will provide optimum performance, grip and fuel consumption without the noise of tyres on road drowning out the soft sounds of Luther on the stereo system.

So do we know and understand enough about the tyres we have fitted on our car? I would suggest not because at some point our lives may actually rely upon our choice of tyre. So let me enlighten you with a few of the basics and some of the latest developments, some of which we should thank F1 designers for.

Our first consideration is price which can vary considerably, not only between tyres but at different times of the year. This is because the price of the three most important component parts fluctuate massively in the open market, independent of each other, these being rubber, steel and oil.

In order to make tyres more efficient, long lasting and safer more and more money has to be invested each year which adds to the cost of the tyres. Legal demands such as the fitting of Tyre Pressure Monitoring Systems (TPMS) to all cars manufactured after November 2012 adds to the cost.

The current systems rely upon a transmitter fitted to the valve and powered by a small battery but the latest developments will result in a microchip being embedded within the tyre without the need for a battery. But this type of development costs a fortune which has to be recovered out of the price that tyres are sold at.

Not only will the microchip satisfy the legal requirements it will also monitor tyre temperature and performance that will allow the car settings to be optimised. In future the chip will also interact with weather conditions to influence the car’s behaviour. As the chip tells the car about the tyre’s temperature and pressure this information could then be used to adjust braking, steering and ESP responses.

Dunlop are looking at how the chip technology could be used to manage the tyre throughout its life, telling the driver about tread wear and condition. Even better news is that the tyre manufacturers believe that the new chip technology will be cheaper to fit that the current tyre pressure monitor systems required by law.

The main problem is that of retro fit, whilst the manufacturers agree that the new technology can be easily integrated into new cars it is proving to be a challenge to fit into existing cars – but it is being worked on. As mentioned earlier the component parts of the tyre come at a highly fluctuating cost so the manufacturers are looking at ways alternatives can be used.

Currently they are working on alternatives to oil, something that has been ongoing for many years but the latest advances in replacement commodoties have been made in the development of alternative and more sustainable rubber. The new rubbers are being extracted from maize, soya and even dandelion plants.

The rubber is extracted from the dandelion roots and believe it or not, according to Continental brand manager, Peter Robb, ‘It offers the most potential for the biggest impact on tyre manufacture for years.’ One of the biggest advantages is that the plants can be grown close to the manufacturing plant reducing delivery time and costs.

They reckon that they will have tyres using this new rubber by 2020. The new type of natural rubber will also have the benefit of being harder and longer wearing and some claim that CO2 emissions could be cut by 10g/km. Also the harder compound will reduce road noise. Another area of development at the moment is airless tyres being held up by a series of vanes.

This development is being pioneered by Bridgestone but it is suggested that this is years away from fruition as the development so far has produced tyres with a maximum load capacity of 410kg and a top speed of 37mph. Way to go methinks! Another challenge faced by manufacturer is the desire of drivers to have large, more aesthetically pleasing wheels fitted to their cars.

Apparently this is particular to the UK. The rest of Europe is not so concerned so the manufacturers are trying to come up with a solution that still makes the car look attractive but makes the tyres more environmentally friendly with lower rolling resistance, lower road noise, better fuel consumption and using less materials.

Electric vehicles may lead the way with the new BMW i3 having 155/70 R19 fitted. Quieter tyres are also on the way as the demand from drivers increase and legislation tightens. Continental developed the Contisilent tyre originally for the Audi RS6 fitted with very wide and low profile tyres.

Dunlop Tyres (Photo credit: Wikipedia)

They managed to substantially reduce the noise by fitting a foam strip to the inner surface of the tyre circumference. This acted like a damper reducing vibrations that transmit through the suspension and body into the cabin. The manufacturers will be paying more attention to this technology as legislation becomes stricter. So there you have it a roundup of the latest tyre technology. Airless tyres and dandelion rubber. By Graham Hill

Related articles

• Dunlop reveals tyres that can ‘talk’ to car (telegraph.co.uk)

If you are one of those that use the Dartford Tunnel/Bridge you will know that either side of the Thames can get a tad congested from time to time. This is annoying and can cause a wait of anything up to half an hour (my experience) but you know when the congestion is likely to occur so you try to avoid those times.

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.

Foreigners and truck drivers don’t seem to know these times so if you find yourself in one of these tailbacks or even whilst cruising at reasonable speed towards the toll booths you can find yourself flapping whilst trying to dig your change out of your pocket ready to throw into the bin located at the toll.

This isn’t helped when you have a juggernaut on one side of you and a foreign driver on the other side, all doing the same. But amazingly very few run into each other and the delays, as far as I’m concerned are minimal.

However, they could do one thing that would speed things along and that is to take those who have pay as you go Dart Tags fitted to their vehicles that enables them to simply drive through the toll without stopping to have a type of bus lane (Dart Tag Lane) reserved for them, about 2 miles before the crossing.

To segregate at the last minute, as happens at the moment) means that these people are sitting way back in the queue, adding to the congestion whilst the Dart Tag booths sit mainly unused until the Dart drivers peel off. Now that to me would be an excellent solution. Not so according to the Highways Agency who will be removing the booths from October 2014.

The booths will be replaced by a remote system similar to the congestion charge. As with the congestion charge anyone not paying the fee will receive a penalty charge. But the good news is that you can pay online, by text, at shops and by phone. A pre-pay option will also be available which, according to the Highways Agency, will save users up to a third of the fee.

Hmmm, this all sounds good if you are a regular user but it seems to me that instead of fumbling in your pocket for a few coins drivers will be busy calling and texting whilst driving or stopping short of the tunnel/bridge in order to prevent a penalty charge. I think we have some interesting times ahead on the M25! Or again, is it just me? By Graham Hill

You know how much I despair of the consumer credit legislation in the UK but I equally despair of the legal system in this country and not just because of the EU interference in the way we administer our own citizens. I read copious amounts of text in order to come up with interesting items for my newsletter and my blog.

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.

Some of what I read is funny and some very sad with some combining sadness with total injustice. For example there was a lady in Leicestershire who had an accident whilst on a mobile phone and driving at the same time. Sadly she collided with another car and two children were killed.

In my book, as a dad of three kids, that comes close to making the case for bringing back capital punishment. But our ridiculous legal system only found her guilty of careless driving resulting in an 18 month ban and a £3,000 fine. But it gets worse. As the lady was driving on company business there was a health and safety issue, surely her employer should be held liable for the actions of the employee who was taking a call whilst driving.

Apparently not so according to Leicester police who decided not to prosecute because ‘The call received by the driver was of a social nature and not work related, and therefore it did not fall within the Health and Safety at Work Act.’ How appalling is that? I would also suggest that the police take a more careful look at the act because it is my belief that whilst at work the law would cover personal calls.

The fact is that it is a disgusting end to an appalling crime. At the other end of the spectrum if you accelerate through a puddle and splash pedestrians or mount a pavement you could receive an on the spot fine of £100 and 3 points on your licence (this can be reduced by taking a safe driving course).

Since August of last year when the new laws, which include lane hogging and tailgating, were introduced 5,472 drivers have been caught. But just when you think that the new laws could be preventing accidents through better awareness and fines it comes to light that 5 forces, Northumbria, Dyfed-Powys, Durham, South Wales and Cleveland are not stopping inconsiderate drivers at all because they don’t have the facilities to offer the education courses. Is it me or are we seeing the fabric of this country deteriorating? Something really does need to be done. By Graham Hill

Related articles

• States With The Harshest Penalties For Texting And Driving (cheapcarinsurance.net)

I know I keep whinging on about the FCA and their new rules but I am genuinely worried about the affect it is having on the ability of lenders and intermediaries to do business and for genuine borrowers to be able to take out finance. As a result I’ve become pre-occupied with the subject of affordability and how lenders can analyse the application from a client to assess whether the customer should receive the finance or not.

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 that lenders have faced for years is – will the applicant make his repayments? The only way they have been able to assess this is by combining historical data with statistics to arrive at a pretty Heath Robinson credit score.

From the information obtained from the credit reference agencies combined with the lenders own score card requirements a further analysis takes place using statistics to arrive at an acceptance, decline or an acceptance subject to certain conditions or additional information.

For example if you are married with children in a house that you ‘own’ you are less of a risk and more likely to pay than a single person with no dependents living in rented accommodation. The fact that you own your house and have made your mortgage payments on time contributes towards your credit score but the fact that you are married with dependents is part of the lender’s score card. Now here is the confusion created by simply looking at your credit score.

Your credit reference agency score could be excellent because you have a credit card with a £2,000 limit on it that is paid on the button each month with a small balance on the card that every 3 months is fully paid off. All other payments are made on time including your mortgage which shows you own your property and you have no adverse whatsoever on the file.

But just because you have an excellent credit score doesn’t mean that you can afford to take out a finance agreement that will cost you £500 per month. You may show that historically you have met all your commitments and therefore represent a good credit risk but where is affordability in all this?

The lender’s own score card may show that having responsibilities, like a mortgage and children, living in a certain area in a certain job may statistically make you a good risk, there is nothing to prove it and I believe that it is this shortfall that has caused the Government via the FCA to force the lenders to test the ability to pay rather than the intention to pay.

But my question is this – if, through some twist of fate or luck the system worked – why try to fix it to the detriment of all concerned? We know that short term or pay day lending is a totally different type of product and given the distress that the collection and ability to rollover the debt, thereby substantially increasing the amount owed, causes consumers, it makes sense that lenders apply a more stringent set of affordability tests.

But that doesn’t apply to normal lending where the lenders have many years of experience under their belt and know who represents a good risk and who represents a bad risk. It’s a little like Ford identifying a problem with Focuses manufactured between 2010 and 2012 but recalling all Focuses ever made just to be on the safe side. It’s ridiculous.

In my simple opinion the ‘problem’ is being approached from the wrong end as I believe that generally most people have the intention to pay and have already personally checked the affordability of the finance out of their income. If someone dies in a car accident the Government doesn’t stop everyone from driving.

Lessons need to be learned, addressed and repaired to prevent it from happening again. The same applies to lending. But it already does. The lenders would soon go out of business if the number of defaults and arrears kept increasing so they are obviously refining their credit underwriting but even the lenders don’t have access to a crystal ball to see into the future.

The Government needs to spend money on helping those with debt problems, assist them in managing the debt and help them to recover with least pain to them and their family. When it takes two and a half years for the Financial Ombudsman to review a complaint it is clearly here that effort and money needs to be funnelled not into affordability checks that the lenders do quite adequately.

I ask the question again, what happens to those that wish to borrow money for a car in order to get to work or get their kids to school when the lender, after applying the new tests says no? The whole FCA concept has been ill conceived and badly thought through and for once it has nothing to do with the EU. By Graham Hill

There is an expression, be careful what you wish for. I’ll finish it by saying – because it might bite you on the bum. Many people complained about the Government dictated fuel consumption figures. I’ve discussed this on many occasions. The figures don’t reflect fuel consumption in the real world, whatever that is.

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 figures are measured in near perfect conditions using a rolling road in a temperature controlled room etc. But whilst the conditions don’t reflect what you would encounter in the centre of Brighton or any other city come to that nor do they reflect the conditions you would encounter on the M6, north of Birmingham on a Tuesday afternoon.

The point is that it is impossible to simply come up with a ‘real world’ fuel consumption figure. What Car may seem to think that it is possible and as a result publish ‘Real World’ combined fuel consumption figures but they are simply rubbish. I drove to Birmingham twice within a week. I felt that I was driving pretty much the same.

There was a small hold up around the M25 near Heathrow on one of the trips but other than that the traffic seemed pretty much the same and I was travelling at a pretty steady speed. The big difference was that on one trip the sun was shining and the conditions were dry, on the other it was hissing down. The result was 50.9 on the first trip and 44.1 on the second.

Now according to the handbook the combined fuel consumption should have been about 60mpg but I never expected to achieve that. What it enabled me to do was compare different cars knowing that one car would return a better fuel consumption than the other without knowing exactly how they would compare in the ‘Real World’.

So to my mind whilst the results are far from what I would expect to achieve, especially the way I drive, the Government figures make the most out of a bad situation. But here’s the crunch. In 2017 the EU is pushing for a new emissions test to be introduced. In addition to emissions the test will include fuel consumption checks which experts say will better reflect real world figures.

Now this may be great if you want what some would consider to be more accurate fuel consumption figures but the change to the way that cars are tested could show CO2 emission figures up to 30% higher increasing the benefit in kind tax for company car drivers by as much as 35% (no I’m not going daft it’s to do with the CO2 banding).

Car tax will also increase as will Class 1a NI contributions by employers. It is clear that the current testing system needed reviewing (currently the New European Driving Cycle – NEDC)  because, for example when testing the cars all fuel consuming gadgets are switched off, such as lights, air conditioning etc. and whilst 10% of the test time has the vehicle idling the figures don’t reflect the new stop/start technology. But with greater fuel consumption accuracy, as is expected with the introduction of the Worldwide Harmonised Light-duty Test Procedures (WLTP), comes the bite on the bum. You have been warned. By Graham Hill