FCA Publishes Final Findings On Motor Finance Market
Following the publication of its interim findings into the motor finance market in March 2018, the Financial Conduct Authority (FCA) has now published its final findings on the sector.
This report focuses on issues relating to commission arrangements, pre-contract disclosures and affordability assessments. As part of this work, the FCA surveyed 20 motor finance providers and carried out an analysis of loan data and a mystery-shopping exercise.
The FCA’s key findings were:
The way commission arrangements are operating in the motor finance sector may be leading to customer harm.
Some customers are paying more for their finance because of the way lenders choose to remunerate their brokers.
They are not satisfied that firms are complying with relevant regulatory requirements, including around affordability assessment.
They also have concerns in relation to the disclosure of commission and other pre-contractual disclosure and explanations.
The FCA has advised that all firms acting as lenders or brokers in the motor finance sector should read this report and consider whether they need to review or amend their policies and procedures and associated systems and controls. They will follow up with individual firms where they identified concerns through their findings, and, where necessary, they may consider supervisory or enforcement action.
Dealers with credit broking permissions are responsible for ensuring that they take reasonable steps to satisfy themselves that a product they wish to recommend to a customer is not unsuitable for a customer’s needs and circumstances. They must also pay due regard to whether the credit product is affordable and whether there are any factors that might make it unsuitable for the customer.