The latest news from iVendi and the industry


The latest news from iVendi and the industry

Full disclosure could be imminent following FCA review

Wed, 13/03/2019

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

James Tew, CEO, said that 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 brokers and other introducers is, in many respects, probably correct.”

The FCA’s criticism centred around individual broker’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 broker’s desire to earn commission.

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

James said: “This is very much a clear shot across the bows for motor finance companies and their approach to operational oversight of introducers such as brokers. 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 the industry 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 brokers and other introducers controlling sell-out rates.”

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