By Allen Jones There remains a not insignificant number of asset finance businesses that continue...
By Allen Jones
Personal Contract Hire (PCH) leasing has become big news in car retailing and in doing so is promoting the broader appeal of leasing with its distinctive benefits, not least of all cashflow and affordability. However, it is essential that businesses stay compliant when it comes to some of the promises being made; for me, that means both the spirit and letter of regulation.
On a daily basis, I see and hear adverts promoting the availability of cars through PCH. What occurs to me is that these promises are so good, I wonder just how compliant they were with advertising regulations. Our research into businesses supplying PCH is that such that businesses could be placing themselves and potentially their leasing suppliers at risk.
We asked a mixed demographic panel of consumers to review leasing promotions from a selection of 16 brokers/dealers/leasing providers based upon a basket of promotional platforms including; TV, radio, email promotion, online search and social media. Consciously subjective to mirror a customer’s car ‘buying’ journey, the overall conclusion from the Panel was that they found the promotion of PCH potentially appealing but confusing.
In part, confusion was caused by a lack of understanding of leasing when compared to outright purchase, HP and PCP finance. Beyond this, not all promotions highlighted the type of ‘relevant risks’ that these potential customers expected.
Common issues included:
- Mileage and excess mileage – it was common to find no reference to any excess mileage implications at all while one site suggested that this was likely to be ‘only a few pence’ per mile
- Scant, or no information regarding end of contract vehicle condition requirements
- A lack of clarity on the issue of ownership at the end of the agreement period
Beyond these potential compliance issues, the panel identified other areas of confusion:
- A common misunderstanding of the business-speak ‘rentals in advance’ terminology as a concept, as opposed to a deposit, or ‘initial payment’
- Confusion about the rationale for the common price differential between business and personal users when online
- An absence of ‘traditional information’ – cash price of the car and the type of Representative Example & APR information most expected to experience
There was a broad span of quality in the promotions assessed and certainly, the brevity of platforms such a social media, create their own challenges. However, our conclusion is that with the growth in PCH activity likely to lead to greater scrutiny by the media and potentially regulators, providers can benefit by providing a more customer centric experience. Clarity in the product and risks should be very transparent at an early stage in a way that a typical consumer can understand – the challenge for the businesses is, ‘is it?’
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