Spread the love

SMALL dealerships need to make sure they are fully compliant when dealing with consumer finance – they are not too small to implement proper practice according to the Financial Conduct Authority (FCA).

Since January this year, 38 motor dealers have received final notices that have been published on the website and have had their consumer credit permissions cancelled.

Cases are currently running at least one a week, accounting for eight motor dealers losing their permissions to offer finance to customers.

Reasons given by the FCA for the removal of the motor dealers include:

  • Failure to satisfy the suitable threshold conditions.
  • Not being open and co-operative with the Authority (FCA).
  • Failure to comply with Principle 11 – ‘Relations with regulators’; “A firm must deal with its regulators in an open and cooperative way and must disclose to the FCA appropriately anything relating to the firm of which that regulator would reasonably expect notice”.
  • Lead the Authority to conclude the firm has failed to manage its business in such a way as to ensure that its affairs were conducted in a sound and prudent manner, that it is not a fit and proper person.

Paul Speakman, Director of Automotive Compliance, said: “With all the FCA activity and ongoing consultations in the consumer credit market, it is common knowledge that the regulator is carrying out research into a number of areas of motor finance and dealers need to be mindful and review their current processes to understand if they have of any shortfalls.”

In completing the application the dealer has already committed and confirmed that they have regulatory practice in place:

  • Procedures and Management Information to support they’re Treating Customers Fairly.
  • The ability to complete its regulatory returns via GABRIEL.
  • Documented compliance procedures in place.
  • Compliance monitoring programme document.

The dealer may be asked to demonstrate any or all of the above after their permissions have been approved, not at the point of application. In some instances of these notices, it may well be the dealer has assumed they were too small to implement such practices and that the regulator would not be checking.

What is becoming apparent is that some motor dealers have likened their Consumer Credit application to that of the prior regulator, The Office of Fair Trading, which was a completely different regime.

Got a spare 30 seconds?

 Help us to provide you with better market insight by completing a very short survey. It is anonymous and only takes 30 seconds. You will get free access to the quarterly results.

Thinking of the switch to electric?

Need help in finding the right electric vehicle for you? Compare driving range, battery capacity, charging time, price, and features to find the perfect EV for you.