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The FCA's motor finance review analysed - a Black Horse advertising feature

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The FCA's motor finance review analysed

It was great to see the long anticipated FCA’s report on motor finance being published. Its purpose is to ensure the market is working well for both a sustainable industry and for consumers. This is something we should all welcome.

At Black Horse, we look forward to the opportunity to work with the FCA and the industry to respond.

 

Commissions

More needs to be done to protect customers from higher risk commission models. It is worrying that the FCA found that customers can pay considerably more due to some forms of commission that generate a higher risk of poor customer outcomes and a greater distribution in customer rate and dealer commission. The regulator implicitly reinforces the fact that a car finance proposition must stand in isolation from both a regulatory and a customer value perspective. Often the finance offer can be considered as one part of an overall package, together with the price of the car being sold, the part-exchange offer and other services such as warranties, servicing and insurance. This enables flexibility in how the overall offer is constructed for any given customer, often to help tailor the package to a customer need. However, the car finance offer must stand up to scrutiny in its own right and will be judged as such.

 

Product information and disclosures

Intermediaries, brokers, and dealers need to divulge key product features and other regulatory disclosures, including the existence of commission early enough in the sales process to inform customer decisions.

The FCA's report states that it is regulator implicitly reinforces the fact that a car finance proposition must stand in isolation from both a regulatory and a customer value perspective. Often the finance offer can be considered as one part of an overall package, together with the price of the car being sold, the part-exchange offer and other services such as warranties, servicing and insurance. This enables flexibility in how the overall offer is constructed for any given customer, often to help tailor the package to a customer need. However, the car finance offer must stand up to scrutiny in its own right and will be judged as such.

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