Consumer Finance overview from Phoenix Financial Consultants 06/23

1. CONSUMER FINANCE
BRIEFING FOR RETAILER
INTRODUCERS
Ver: 06/23
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2. What is
covered in
this
training
1. Background
2. The role of the introducer
3. Use of 0% APR and higher products
4. Using the Phoenix quoting tool
5. Common pitfalls to avoid
6. Vulnerable customers
7. Dissatisfaction from loan customers
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3. 1. BACKGROUND
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4. 1.Background - Credit Broking
When a firm introduces customers
to a third party lender this activity is
known as Credit Broking;
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Phoenix Financial Consultants
Limited is an authorised Credit
Broker.
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Credit Broking is regulated by the FCA
under the Consumer Credit Act 1974;
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5. ✓ We sell the right product and service for the customer’s needs;
✓ There is one price of the goods and services provided irrespective of how the
customer pays (cash or loan). The price cannot be increased just for the customer
who uses 0% finance - See section 3 below
✓ The customer is provided with all the correct information, which allows them to
make an informed decision. Customers must never be misled
✓ Vulnerable customers are protected;
✓ Complaints are identified and fully investigated and redress paid where we have
made mistakes.
✓ As an introducer you have a role in delivering the above objectives by sticking to
your role.
1. Background – Overall FCA Requirements:
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6. The Phoenix loan option is available in the following instances:
• Borrower must be a homeowner – no tenants are allowed;
• Work must be carried out on a UK residential property – no hotels or other businesses;
• Quote must be given and finance arranged BEFORE the work is done;
• The work does not have to be done at the address of the borrower, i.e. it can be a parent
taking out a loan for a job for their relative who lives in another property;
• Landlords are eligible;
• Borrowers must be over 18 and UK resident;
• No upper age limit – note some customers may be classed as vulnerable (see Section 6);
• Borrower must be employed, retired or self-employed.
1. Background – Minimum eligibility criteria
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7. 2. THE ROLE OF THE
INTRODUCER
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8. • You have applied and been accepted as an Introducer of Phoenix for 12 months;
• You have signed the Introducer agreement;
• The availability of finance will be a significant boost to your ability to win work and
compete against the big operators but only if your use it correctly and stay within the
guidelines.
An Introducer is a regulated status so you must only undertake allowed activities. Your
status allows you to do two things:
1. Advertise the fact that finance is available through Phoenix;
2. Distribute hard copy collateral from Phoenix to your customers describing the finance
option available.
2. The role of the introducer
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9. In relation to advertising the existence of finance, you are allowed to do the
following:
i) Make a statement on your website/Facebook page to the following effect:
“Finance available through Phoenix” or
“Loans for boilers available through Phoenix” or
“Window finance available through Phoenix
ii) Include the approved Phoenix advertising banner on your website. This links to
a calculator for the customer which is tailored to the finance options offered.
You are not allowed to use any other language to describe finance.
2. The role of the introducer - Advertising
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10. Apart from the activities noted on the previous slides you are not allowed to take an active role in the
selling of finance.
This means you are NOT ALLOWED to do any of the following:
• Discuss the features and benefits of the loan option – simply refer the customer to the job quote which
links to the payment options page;
• Comment on the APR or any other terms of the loan – you must refer any questions the customer may
have to your job quote (which links to the loan application) or to the Phoenix link on your website;
• Assist the customer with the loan application;
• Advise the customer on whether he/she should obtain a loan – this must be the customer’s decision;
• Comment on interest rates available in the market for similar loans;
• Comment on whether you think customers would be accepted by the lender or not;
• Influence the level of deposit paid by the customer (over and above your minimum for cash
customers);
• Make use of any financial promotion not approved by Phoenix;
• Make any reference to subsidies paid by the introducer for 0% finance.
2. The role of the introducer - What you can't do:
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11. 3. OFFERING 0% APR AND
HIGHER PRODUCTS
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12. • 0% APR and other APRs that may be available( e.g. 10.9%, 13.9% etc.) are subsidy products – this means there is
a cost for the retailer to bear for each loan approved;
• In the medium term offering 0% may generate more leads and conversion potentially offsetting the subsidy cost;
• In the short term the retailer may wish to recover this cost in the job price;
• However, this specific cost CANNOT be directly passed on to 0% customers in a job quote. Neither can subsidy
amounts paid by retailers be discussed with or notified to customers;
• The only way subsidies can be recovered is INDIRECTLY, i.e. by making an average adjustment to prices for ALL
customers. This clearly has an impact on margin which means that 0% APR is not viable for all retailers.
How does this work in practice?
• Retailer is planning to offer 0% APR over 12 months and 13.9% APR over 3-10 years;
• If a 12 month 0% financed job has a 12% subsidy and each 13.9% financed job has zero subsidy;
• It is estimated that 30% of all customers (cash and finance) will select 0% finance;
• Therefore, in order to recover the cost of the subsidy the retailer may consider increasing the average price of all
jobs by 3.5% (12% x 30%) across the board;
• If experience demonstrates that more (or less) customers are taking 0% the average price can be adjusted
upwards or downwards in future;
3. Offering 0% APR and higher products – pricing considerations
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13. To summarise:
A retailer is not allowed to:
• i) ask the customer before quoting if he would like 0%, then
• ii) add an extra 12% for the subsidy cost to the quote.
Because this means that a customer who didn’t request 0% finance would have paid a lower price for the job. There
can only be one price for the job no matter how the customer pays.
• Any price increases to cover subsidies must be applied on an average basis to all customers and NOT to just a few;
• Subsidies must never be discussed with or notified to customers;
• If you try to add 12% extra to some customers but not others you will be breaking the law;
• Customers are aware that 0% has a cost and they generally expect prices to be higher on average when 0% is
available. However, if you add on an additional 12% based on whether the customer wants 0% or not you will leave
yourself open to complaints from the customer – and you will have to return any monies you have received.
What if I don’t want (or can’t afford) to increase my prices?
If you do not want to have to increase your prices, a 13.9% APR product which is subsidy free may be an alternative.
3. Offering 0% APR and higher products - warning
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14. 4. USING THE PHOENIX
QUOTE MODULE
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15. Does the lender require the customer to pay a deposit?
No – lenders will finance the entire job but customers are free to pay a deposit if they wish:
Can the retailer require a deposit from the customer?
Yes – as long as your deposit policy is the same whether the customer pays on completion or with a loan.
How do I account for the deposit on the quote system?
Deposits are NOT accounted for on the Phoenix system by the retailer. This is because the quote system must show
the gross value of the quote. You can collect a deposit from the customer (and provide a receipt) but the deposit is not
deducted from the quote.
The customer notifies the deposit paid/due to be paid when he applies for a loan on receipt of the quote.
4. Using the Phoenix quote module - deposits
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16. 4. Using the quoting module – retailer journey
The following screens show a basic overview of the quote creation process from a retailer’s
perspective. A more detailed system user guide is available from the “Resources” section of the
system.
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17. Creating a new customer quote
CLICKING ON THE “CUSTOMER
QUOTES” MENU ITEM WILL GIVE YOU
THE OPTIONS TO EITHER CREATE A
NEW QUOTE OR TO VIEW EXISTING
QUOTES.
CLICKING ON “ADD NEW QUOTE”
WILL LET YOU START CREATING A
QUOTE.
YOU CAN ENTER YOUR OWN QUOTE
REFERENCE IF DESIRED, AND THEN
SELECT THE TYPE OF QUOTE YOU WISH
TO CREATE.
THE QUOTE OPTIONS SHOWN WILL
DEPEND UPON THE SERVICES YOUR
COMPANY PROVIDES.
CLICKING ON THE NEXT BUTTON WILL THEN PROCEED TO
ENTERING THE CUSTOMER’S CONTACT DETAILS
If you wish to create a
“dummy” quote to play with
the system, you can click on
the Create a Test Quote
button
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18. Creating a new customer quote (continued)
NEXT, ENTER THE CUSTOMER’S
CONTACT DETAILS. PLEASE MAKE
SURE THEY ARE CORRECT, AS THEY
WILL BE SHOWN AND USED BY THE
CUSTOMER LOAN APPLICATION
CLICKING ON THE NEXT BUTTON WILL THEN PROCEED TO
ENTERING THE CUSTOMER’S ADDRESS DETAILS
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19. Creating a new customer quote (continued)
NEXT, ENTER THE CUSTOMER’S
ADDRESS. THIS IS THEIR HOME
ADDRESS. (YOU CAN JUST START
TYPING, AND THE SYSTEM WILL TRY
TO COMPLETE THE REST FOR YOU)
IF THE WORK IS TO BE CARRIED OUT
AT A DIFFERENT ADDRESS, FOR
EXAMPLE IN THE CASE OF A
LANDLORD OR A 2ND PROPERTY,
THEN PLEASE ENTER THAT IN THE
SECTION BELOW.
PLEASE MAKE SURE THEY ARE
CORRECT, AS THEY WILL BE SHOWN
AND USED BY THE CUSTOMER LOAN
APPLICATION
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20. Creating a new customer quote (continued)
FINALLY, ENTER THE
RELEVANT DETAILS OF
THE QUOTE.
THE FIELDS SHOWN
HERE WILL DEPEND
ON THE TYPE OF
QUOTE YOU SELECTED
EARLIER.
CLICKING ON THE FINISH
BUTTON WILL THEN SEND THE
QUOTE TO YOUR CUSTOMER.
YOU MUST FILL IN ALL FIELDS
SHOWN WITH A RED
BACKGROUND - THEY WILL TURN
GREEN ONCE YOU HAVE.
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21. Creating a new customer quote (done)
YOUR QUOTATION WILL NOW BE CREATED, AND A LINK TO IT IS SENT TO THE
CUSTOMER VIA EMAIL.
IF YOU HAVE ENTERED A MOBILE NUMBER FOR YOUR CUSTOMER, THEY WILL ALSO
RECEIVE A TEXT MESSAGE ADVISING THEM OF THE NEWLY CREATED QUOTE AND TO
CHECK THEIR EMAIL.
YOU ARE THEN REDIRECTED TO THE ALL QUOTES SCREEN WHERE YOU CAN VIEW
THE STATUS OF YOUR QUOTES.
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22. The customer is then free to choose their desired term,
and continue to fill in their loan application form.
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23. 5. COMMON PITFALLS TO
AVOID
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24. 5. Common Pitfalls - Financial Advice
I think you should go for the 10
year loan rather than the 5 year
loan so you can keep your
payments low;
I don’t think a lower
APR product exists in
the market for this
type of loan;
The loan is a good way of
keeping your savings for
the wedding;
I wouldn’t bother with the
British Gas 0% offer – that just
makes the boiler more
expensive
Most of my customers
go for the loan option;
If it were me I would
certainly go for the
loan option;
I think you should pay a
higher deposit to keep
your interest payments
as low as possible
A friend of mine recently went
for this exact loan option
11.9% is not a bad
deal for a bathroom
loan;
Financial advice is any statement which directs a customer towards one product over another or directs them on how
to use the product in a particular way. Retailers must never give customers financial advice. It is very easy to
give financial advice to customers by accident; Common examples are shown below:
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25. Guidance for retailers – features of the loan
• Do not get into a discussion with the customer about whether ‘you think’ they should go for the 5 year or the 10
year loan. If you do this you will be giving them financial advice;
• Similarly, do not try to steer the customer into paying more than the minimum deposit applicable for cash
customers – this must be the customer’s choice.
• If you get any questions, simply refer the customer to the quote for the job where they will find details of all their
payment options.
Guidance for retailers – comments on competitors
• Do not get into a discussion with the customer about finance offerings from competitors – even if the customer
asks you directly. Stick to selling your products/services only, avoiding any talk of finance;
• Do not comment on 0% finance offers from other providers or whether this means that these providers are more
expensive than you are. Simply concentrate on the price of your service;
• If you try to argue that a job from you (financed at 13.9% APR) is cheaper overall than another provider’s at 0%
you will be straying into financial advice. Keep any comparisons with competitors to the job price only.
5. Common Pitfalls - Financial advice
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26. 6. CUSTOMER
VULNERABILITY
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27. While businesses have a responsibility to treat all consumers decently, fairly and without any pressure, it is
particularly important that they are aware of their duties towards vulnerable consumers.
Definition
A vulnerable customer is someone who, due to their personal circumstances, is especially susceptible to detriment
or harm, particularly when a firm is not acting with appropriate levels of care.
Identifying a vulnerable consumer
When quoting, retailers are likely to encounter a certain number of vulnerable customers – especially amongst the
elderly. It is important that specific care is taken when dealing with these customers to ensure so that they do not
suffer detriment inadvertently.
6. Customer vulnerability
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28. • Blindness or having poor sight;
• Deafness or being hard of hearing;
• Lack of proficiency in English;
• Severe physical disabilities;
• Dementia/Alzheimer's;
• Mental health issues;
• Acting as carer for relative;
• Recently bereaved;
• Financial – unable to afford the job;
• Intoxicated by drugs or alcohol.
6. Customer vulnerability
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You should be alert when interacting with customers to pick up on any signs that the customer may be vulnerable. The
following are some obvious indicators:
Action to be taken
Care should be taken when quoting / working with a vulnerable customer. Try to understand the impact of a
vulnerability and how this might affect the consumer experience and outcomes whether finance is applied for or not.
As part of the loan application process, Phoenix will perform a Duty of Care assessment, and take steps needed to assist
the applicant where applicable to ensure they understand the implications of entering into a finance agreement.

29. 7. DISSATISFACTION FROM
LOAN CUSTOMERS
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30. • As a regulated business Phoenix has a responsibility to correctly identify expressions of dissatisfaction from
customers who paid with a loan;
• If not identified correctly, these issues could become formal complaints;
• You also have the same responsibility to identify any dissatisfaction from loan customers;
• You could encounter an expression of dissatisfaction during the sales visit or during a subsequent phone call
with the customer.
Action to be taken
• You must notify Phoenix know about any dissatisfaction from customers who paid via a loan – whether it be
about the loan or about the underlying job.
• If the dissatisfaction is related to the install you should try to resolve it to the customer’s satisfaction as soon
as possible;
• If the dissatisfaction is related to the loan, Phoenix will take ownership for resolution;
7. Dissatisfaction from loan customers
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31. Examples of expressions of dissatisfaction from customers:
• “I am not happy that I was offered 19.9% APR instead of 9.9%”.
• “The engineer said the rate was 10.9%”.
• “I am so frustrated it has taken the lender so long to give me a decision on my application”
• “I cannot believe I have been declined by the lender – my application should have gone through”.
• “I am not signing the satisfaction note because the installer left a mess which was not cleaned up”.
• “I am not happy the installer told me I had to pay a 10% deposit in cash”.
• “One of my radiators is not working since the new boiler was installed”.
• “The installer took ages to return my house keys”.
IMPORTANT REMINDER – any comments like the above – or any other expressions of dissatisfaction - must
be notified to Phoenix as soon as they have been made. Use the facility on the quote module to do so.
7. Dissatisfaction from loan customers
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32. If you have any questions we’re happy to
help. Simply call us on
0330 041 4857 and one of our friendly
team will gladly assist you :)
Ver: 06/23
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