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Ensure you're not singled out for attention, warns compliance specialist

Dealers are warned by David Wearden, head of compliance at broker Mann Island, to expect the Financial Conduct Authority to make one of them an example soon.

“The FCA won’t hesitate to send a warning shot across the bows of the industry should it discover malpractice,” he said.

“The demands of regulation can’t be addressed through a tick-box approach. Dealers should do everything they can to ensure they’re not singled out for attention.”

Wearden (pictured) said many dealers struggle with compliance expectations because of the volume and technical complexity of rules and guidance, and nervousness about how the FCA will enforce them.

Emily Benson, financial services regulation partner at law firm TLT, said: “Motor finance providers could be among sectors finding themselves at close quarters with the FCA. For the car finance industry, the challenge will be to incorporate a rigorous control framework into a business subject to less-invasive regulatory controls.”

Jonathan Turner, strategic development manager at Hitachi Motor Finance, said there is a lack of clarity from the FCA and finance providers, though dealers and brokers accepted remuneration packages need to change.

“There is reluctance to implement changes straight away because inevitable income reduction is hard to swallow,” he said. “Instead of being proactive, it’s clear some dealers are waiting until forced into changes by the regulator, which could leave them exposed.”

Grant Perks, sales compliance specialist at Alphera Financial Services UK, said bigger dealer groups need to ensure customers are treated the same at all sites.

Mark Lloyd, head of compliance at DSG Finance, said: “Concerns tend to be around interpretation. A common question is ‘how far are we required to go?’ "

James Broadhead, chief executive officer at Close Brothers Motor Finance, is confident dealers will grasp the FCA’s demands. He believes the regulations enhance the service they provide.

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