Why we are consulting now
Our extensive research into this sector has found that discretionary commission models have led to higher finance costs for consumers. Firms are also often failing to give customers timely, relevant information.
This paper consults on proposals to:
- ban commission models that can give brokers and motor dealers an incentive to increase a customer’s interest rate
- amend parts of our rules and guidance relating to the disclosure of commission arrangements with lenders
Who this applies to
- motor finance providers
- motor finance credit brokers, including motor dealers
- Chapter 4 is directly relevant to many types of brokers of regulated credit and consumer hire agreements
- this consultation will also be of interest to trade bodies representing consumer credit lenders, consumers and consumer organisations
Background to our work on motor finance
In our 2017/18 Business Plan, we announced a review of the sector. In March 2018, we published an update report setting our initial findings. We published the review’s final findings, in March 2019.
- Widespread use of commission models that link brokers’ commission to the interest rate charged to the customer, leading to conflicts of interest.
- We also found a high incidence of firms not complying with some of our existing rules and guidance on the information they should disclose to customers.
What you need to do
Please send your comments to us by 15 January 2020.
Online response form
You can also:
- email your responses to [email protected] or
- write to: Policy Consumer Credit, Financial Conduct Authority, 12 Endeavour Square, London E20 1JN
We will consider your feedback and plan to publish a Policy Statement (PS), including any final rules, at the beginning of Q2 2020.