The Financial Conduct Authority (FCA) needs to ramp up its work in the motor finance sector, particularly around unfair commission models.
Responding to the FCA’s final report on motor finance, the BVRLA has urged the regulator to take a more active role in supervising lenders, retailers and brokers, stepping in with enforcement where required.
“The FCA has been working on this report for two years and has issued plenty of guidance and recommendations during that period,” said BVRLA Chief Executive, Gerry Keaney.
“Over the same period, the BVRLA and its members have taken a close look at our own industry guidance and best practice, supporting these with a comprehensive training and inspection programme.
“The time for excuses has passed. There is no place in the motor finance sector for companies that are unwilling to embrace the FCA regime and actively demonstrate their compliance.”
Launching its final report, the FCA highlighted a number of concerns, particularly the ‘Difference in Charges’ (DiC) broker commission model which gives brokers discretion to set the customer interest rate and thus earn higher commission.
“This is one area where we need some swift policy intervention to address a blatantly unfair practice,” added Keaney.
The regulator also reinforced the need for greater emphasis on affordability assessments and for lenders to take more responsibility in ensuring that brokers are complying with its Consumer Credit sourcebook (CONC).
“The BVRLA has more than 340 motor finance brokers in membership, who embrace our mandatory code of conduct and governance regime. We would like to see more lenders working with us to improve industry standards and processes,” said Keaney.