Armed forces personnel and their families seek, and are eligible for, motor finance in much the same way as the rest of the UK population. However, unlike much of the rest of the population, armed forces personnel can be redeployed mandatorily, including overseas, on a regular basis, and the destination of the redeployment is not often known significantly in advance. Unless this is taken into account in how motor finance agreements are sold and operated, this can have costly consequences for both armed forces personnel and motor finance providers, for example if an agreement has to be terminated early.
The Consumer Duty shows how such customers should be served. The overall duty is to act to deliver good outcomes for armed forces customers. And the cross-cutting rules require dealers, brokers and lenders to act in good faith, avoid foreseeable harm and enable and support armed forces customers to pursue their financial objectives. Armed forces customers’ financial objectives would include not just accessing affordable finance for their car. They also include avoiding a large bill if they get posted abroad before their finance agreement has ended and knowing whether their agreement allows them to take their car abroad with them.
If a customer says that they are from an armed forces family, dealers and brokers should therefore:
- discuss with the customer what the consequences might be if they get deployed overseas and thus what the best finance options for them might be (taking into account the term of the agreement and the likely costs of terminating it early);
- pass on to lenders the information that they are armed forces personnel and what they have been told about the likelihood and timing of an overseas deployment;
- take into account the timing and likelihood of an overseas deployment when considering both finance product suitability and agreement length, and
- ensure that the features and requirements of the proposed motor finance agreement are clearly explained to armed forces personnel, including the options and impacts if they are deployed overseas.
Lenders should:
- take into account, in their underwriting and collections policies, the specific circumstances that apply to armed forces personnel, including in particular the possibility of an overseas deployment;
- when armed forces personnel are deployed overseas, permit the vehicle to be taken overseas for the remaining duration of a finance agreement. The industry standard is to allow this, subject to evidence being provided of the deployment, the vehicle being comprehensively insured while overseas, and to consider whether any mileage limit should be adjusted;
- when armed forces personnel are deployed overseas before the end of a motor finance agreement, and where they do not wish to or are unable to take the vehicle with them, use best endeavours to find a solution that that is affordable and acceptable to the customer.