Commission Disclosures ‘Must Be Prominent’ To Minimise Risk
An article in Motor Finance Online highlights the risks of not paying attention to the new FCA Commission Disclosures. In the article MotoNovo warn that Commission disclosures must be prominent and sufficiently detailed for consumers, or there is risk of action from the Financial Conduct Authority (FCA).
The new FCA rules on commission disclosure provide significant discretion on how disclosures are made but the authority has warned that a lack of prominence at the crucial stages will place dealers at risk of potential FCA action and claim management companies (CMC) activities. The article stated that one particular CMC is currently campaigning across social media that: “Qualifying PCP holders are claiming £1000s due to undisclosed commissions on their car deal.”
Commenting on the campaign, MotoNovo chief risk officer, Stephen Bothma, said: “While the authenticity of the CMC’s numbers cannot be verified, this message is not an isolated one and the claims suggested are not limited to PCP agreements. In the event of a claim, the accountability lies primarily with dealers and brokers.” To protect themselves, and as the “right thing to do” Bothma adds: “Dealers are advised to double-check that they are complying with the FCA’s new rules on commission disclosure consistently in their promotional and pre-contract activities.”
The new rules require dealers to ensure customers are aware of the existence of any commission, fee or other remuneration ahead of any finance agreement being finalised, however it is not necessary to provide the commission’s monetary value unless the customer asks for it. If a dealer receives a request they must be ready to share commission values promptly.