FCA action to tackle perceived “conflicts of interest and irresponsible lending” in motor finance must be proportionate and not harm vehicle sales, according to NFDA director Sue Robinson.
The FCA stated in its 2017/18 Business Plan, which was published this week, that it will carry out an exploratory enquiry into motor finance as it believes that there might be conflicts of interest and irresponsible lending in the sector.
Following this review they will assess if there is any need to intervene in the market.
But Robinson voiced her concerns about possible repercussions for the industry, stating: “Strong vehicle sales are vital to the UK economy and it is important that any consumer credit regulation is proportionate and does not harm.
“Franchised dealers are highly regulated under the FCA and provide consumer finance under the rules set by the regulator. NFDA will liaise with the FCA on the exploratory enquiry to ensure that the outcome is satisfactory for both consumers and dealers.”
AM reported yesterday that the Bank of England is considering a move to implement tougher legislation forcing finance companies into more stringent credit checks.
The move comes into response to concerns from some industry analysts and MPs that the PCP-enabled boom in new car sales could lead to a crash at a time when debt-laden British households appear vulnerable to economic and political pressures.
However, Robinson warned that there is a risk from FCA intervention if new legislation is not sensitive to the needs of the car market.
She added: “It is important that consumers are able to access finance easily to be able to purchase a vehicle to fulfil their needs such as getting to work.
“Also, at a time when legislators and environmental campaigners are looking for car owners to ditch older more polluting vehicles consumers need to be able to finance a replacement vehicle.”