Andy Smith MBA’s Post

A recent announcement by the FCA explained that it will be reviewing how complaints have been handled in the motor finance sector. This may signal the beginning of a substantial redress initiative for brokers and lenders, potentially comparable in scale to the infamous PPI scandal. To further explore this issue, TCC’s Director of Advisory Practice, Gary Maude outlines a three-point proactive plan for motor finance firms in our insight. Learn more: https://bit.ly/3woNQKq #motorfinance #remediation #redresscheme #discretionarycommissionagreements #PPI #sales #commission #compliance #financialservices #gapinsurance #claimsmanagement

⏸ FCA EXTENDS MOTOR FINANCE COMPLAINT PAUSE ⏸ This, of course, relates to all motor finance complaints involving a so-called 'discretionary commission arrangement' (DCA). An update on next steps to be taken is now expected to be due in MAY 2025 - not September 2024 - to allow the Regulator the time to analyse all the data they have collected from all the firms within scope of this. The pause on complaints is then expected to remain in place until DECEMBER 2025 at the very least. https://lnkd.in/gEWMwe8M

A decision that's had a big impact for the motor trade - let's hope it's very short term and "business as usual" resumes promptly. Car finance firms in crisis mode Car finance companies are in turmoil following a recent Appeal Court ruling that found lenders liable for not disclosing commissions. This decision has led to major firms, including Close Brothers and MotoNovo, pausing new credit extensions, raising concerns about a potential halt in car transactions across Britain. Gary Greenwood, a finance analyst at Shore Capital, warned of "a very real risk that the industry comes to a grinding halt." The Finance and Leasing Association (FLA) is urgently engaging with the Treasury and the Financial Conduct Authority (FCA) to address the situation. Stephen Haddrill, director-general of the FLA, expressed disbelief at the ruling, stating: "It makes a nonsense of the claim that Britain is becoming a more investible place to do business." The FCA is monitoring the market's response and assessing the implications for consumers and the industry. The Times Janine at Urecruit.

Yesterday the Treasury Select Committee has published a letter it received from Nikhil Rathi on behalf of the FCA regarding the Court of Appeal judgement on motor finance commissions. There is limited additional information that wasn't already covered by the FCA's own statement last week, but interesting to note the disclosure that 11 firms paused lending in the wake of the judgement, and that of 8 that have since returned to lending, 3 have moved to zero commission models (at least for now). They again state that they are considering if guidance is needed from them for the industry, which seems an obvious answer, but they do acknowledge there is a challenge with waiting to see what the Supreme Court decides. However, they do acknowledge the FLA's own guidance to its members as a 'welcome' step so those firms can consider that at least as a helpful tool. Beyond that, the letter notes Mr Rathi's upcoming appearance in front of the committee in December, which should be interesting viewing... https://lnkd.in/ePQPNXNT

FCA Update on Motor Finance 🚨 The FCA are proposing to extended the current pause to the time firms have to respond to consumers about their motor finance complaint. Read more on the FCA’s official statement below 👇 #FCA #Finance #FinanceNews #PCPclaims #HPclaims #CarFinance

FCA Update on Motor Finance 🚨 The FCA are proposing to extended the current pause to the time firms have to respond to consumers about their motor finance complaint. Read more on the FCA’s official statement below 👇 #FCA #Finance #FinanceNews #PCPclaims #HPclaims #CarFinance

Commission Disclosure: Could this be the beginning of the end for the UK finance industry as we know it? Context: On Friday 25th October the UK Court of Appeal published a judgement on three cases relating to motor finance agreements where it upheld the claimants' appeals. The Court of Appeal unanimously found motor dealers and brokers cannot lawfully receive commission from the lender without obtaining the customer's fully informed consent to the payment. Clarification: These cases relate to consumer transactions that are regulated by the FCA. The market reaction: Today, I have received numerous emails from our lenders advising that they've paused taking on new applications of credit (of any kind even those that are not regulated) until they understand the position with more clarity. My thoughts: If the lenders in the UK decide that they will enforce commission disclosure across the board including unregulated transactions - this will surely remove some lenders from the market offering less choice for businesses - not good for business. It will also create a race to the bottom as lots of brokers will use this as leverage against other brokers to drive the market down - not good for business. This will give rise to the increasing number of 'bedroom brokers' who have very little overheads and can accept lower margins - not good for the UK economy. We are already self-regulated by the lenders. They cap the commission we can earn - a maximum of 10% in some markets. Our average is 5% across the board and when deals get into the hundreds of thousands this drops to between 1% to 3% - depending upon the complexity of the transaction. I could go on and on. I see trouble ahead - this could be the end for some decent finance businesses offering great service and value. Not to mention hundreds possibly thousands of peoples livelihoods. I hope that some in our industry that hold power and influence can do the right thing and lobby those that are threatening our businesses. #assetfinance #fca #nacfb #commissiondisclosure

🚗 FCA to Consult on Extending Motor Finance Complaint Handling Period 🚗 The FCA has announced plans to consult on extending the deadline for motor finance firms to handle complaints regarding commission arrangements. https://lnkd.in/e8Aw6Qup #ClaimsManagementAssociation #FCANews #MotorFinance #ConsumerProtection #ComplaintResolution #ConsumerRights #FCAConsultation #FinanceUpdate #MotorFinance

Whilst firms won’t find out the exact steps the FCA will take to address concerns surrounding discretionary commission agreements within the motor finance industry until Q3 2024, lessons learned from the PPI scandal suggest affected businesses should be doing what they can now to prepare for the announcement of a major redress scheme. In our insight, TCC’s Director of Advisory Practice, Gary Maude, examines the potential scope of the regulator’s work on motor finance – and outlines the critical measures firms should take to get ahead of the curve and ease the burden on their time, budget and resource down the line. Learn more: https://bit.ly/3IpWRW0 #motorfinance #remediation #redresscheme #discretionarycommissionagreements #PPI #sales #commission #compliance #financialservices #gapinsurance #claimsmanagement

The FCA has, perhaps unsurprisingly, announced today that it will be extending the current pause to motor finance DCA complaints handling until December 2025 and that it will now set out its next steps in May 2025. The FCA says the potential for it to intervene “is more likely than when we started our review” and it appears to be considering consulting on the imposition of a s.404 FSMA industry-wide redress scheme (a power only used by it twice before). If it does go down this route, the FCA sets itself the challenge of establishing that customers with DCAs have suffered a privately actionable breach of FCA requirements, and hence all eyes will be on the judicial review of the FOS DCA decision that takes place in the autumn. The full FCA press release is available here: https://lnkd.in/eQaV_RPV #FCA #financialregulation #motorfinance #redress