Thursday, June 20, 2024
HomeNEWSFINANCIALA clear shot across the bows for motor finance companies

A clear shot across the bows for motor finance companies

Full disclosure of commission paid on motor finance at the point of sale could be imminent following the recent publication of a new FCA review, says iVendi.

James Tew, CEO at the online motor finance technology specialist, said the results were harder hitting than many in the industry expected and a clear sign that business as usual was not an option.

“Our reading of the review is that the FCA has actually developed a much better understanding of the industry than previously and that what it is saying about introducers, whether they be motor dealers or specialist credit brokers, is in many respects probably correct.”

The FCA’s criticism centred around individual introducer’s ability to dictate interest rates, with the lack of any discernable link between the rates being set and the customer’s credit score coming in for special criticism. Instead, it is suggested that rates are being dictated in many cases by the introducer’s desire to earn commission.

Concerns were also raised about the introducer’s disclosure of commission under current rules and whether motor finance companies were doing enough to ensure introducers were complying with FCA regulation. It concludes that, “…change is needed across the market, to address the potential harm we have identified”.

Tew said: “This is very much a clear shot across the bows for motor finance companies and their approach to operational oversight of introducers. Better solutions and processes will need to be put in place.

“The ultimate sanction is probably if full disclosure of commission at the point of sale is made mandatory, something that introducers will be very keen to avoid.

“It may already be too late to avoid this but the industry could certainly attempt to pre-empt any FCA action by ending the practice of introducers controlling sell-out rates.”

Founded in 2009, iVendi makes e-commerce solutions that make vehicle selling easier for dealers, vehicle buying easier for buyers, and vehicle finance easier for all. With offices in Manchester and Colwyn Bay and products connected to more than 7000 dealer locations in the UK, iVendi believes in innovating to deliver results.

 

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