BE prepared for customers to ask more questions about finance deals and dealers’ finance commission.
As well as media interest in the Financial Conduct Authority (FCA) changes, the Authority’s new consumer credit (CONC) rules are designed to ensure consumers have better knowledge of dealers’finance commissions and are ‘more likely to engage with what is on offer’.
The updated CONC rule requires dealers to ensure customers are aware of the existence of any commission, fee or other remuneration ahead of any finance agreement being finalised. The prominence required in disclosing the existence of commission will inevitably lead to more people asking; ‘how much?’
The right to access commission details is not new (see below), but in light of the other changes and inevitable publicity, dealers should anticipate more requests for full commission disclosure, perhaps more especially as showrooms re-open.
Stephan Bothma, MotoNovo Finance’s Chief Risk Officer said: “Recent news headlines crystalise the importance of dealers being prepared to respond to more customer enquiries about commission quickly and accurately as required by the regulator. Dealers must maintain a written evidence trail to prove that this information and broader commission disclosure requirements have been provided on a timely basis. Without this, defending any subsequent legal claims could be difficult.”
The commission to be disclosed to customers must be accurate, or if the precise amount is not known, must reflect the likely amount and it must include any commission or fee or other remuneration payable to the dealer/group by the lender involved.
Bothma added: “Commission disclosure is an ongoing risk. We know claims management companies have been increasingly active in motor finance. Compliance with the new commission disclosure rules and appropriate evidence is critical because accountability lies primarily with dealers and brokers.”