Plans announced by chancellor Rachel Reeves at her Mansion House address last week saw a process unveiled today that sees the Financial Ombudsman Service (FOS) and Financial Conduct Authority (FCA) ask for input from consumers and businesses involved in the sector to improve their effectiveness, especially around mass claims.
James Tew, CEO at the motor retail technology market leader, said it was promising that the government had acknowledged a serious problem existed but faster action was required to solve immediate issues caused by the recent court of appeal decision on commission disclosure.
“Everyone in motor finance will have been pleased to hear the Chancellor seemingly recognise that change is needed around the FOS and FCA to provide greater fairness and clarity to both customers and lenders, and avoid the kind of confusion we have seen in recent weeks. We cannot have a repeat of a situation where lenders have followed all of the official guidance but still find themselves vulnerable to mass claims.
“However, while future improvements are welcome – the consultation runs until the end of January – motor finance companies need more certainty right now and we should be making that case as strongly as possible. The whole used car sector should be working to proactively defend and promote motor finance in order to influence how the commission disclosure situation develops in the coming weeks and months.”
James explained it was vital to mount a campaign to communicate that access to motor finance was crucial to providing people with safe, clean, dependable motoring.
“Motor finance has been under attack because of the court of appeal decision and we should, as an industry, respond by underlining its importance to a properly functioning used car sector. We need to resolve the legal situation around commission disclosure and retaining public confidence is going to be part of this process.
“The fact is that, without motor finance, acquiring a car would become more difficult and expensive for the vast majority of its customers who need transport for their work, family and social lives. Motor finance provides accessibility to flexible mobility and for many people, that’s not just a question of personal freedom but absolute necessity.
“Especially, more innovative products such as PCPs allow people to drive vehicles that have lower or no emissions, more safety equipment, and are more reliable. I’d like to think that implicit in Rachel Reeves’ announcement is at least a partial acknowledgement of all these facts but it would be positive to see more explicit recognition and a plan of action to help resolve the current threatened mass redress.”
As part of this campaign, James said, it was also important to communicate that motor finance providers were overwhelmingly in favour of commission disclosure.
“We have links to almost every business in the motor finance sector and almost all are in favour of commission disclosure, both because of the clarity it provides for consumers and to avoid the kind of situation we are seeing at the court of appeal.
“Most of these companies also think that, over time, disclosure will lead to greater competition in the market and eventually, both a reduction and general levelling in the commissions paid. While this might mean the price of cars rising slightly as dealers look to retain margin, it again adds to overall transparency.”
