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 discussion around limited discretion has arisen because the FCA in its Final Rules that; ‘brokers would be able to decide or negotiate the rate with the customer, even if they are not rewarded for it.’
Startline Motor Finance believes more needs to be done to meet the requirements of diverse groups of used car buyers.
The FCA is consulting with the motor finance brokers on whether to push through an all-out ban on the payment of sales commissions on F&I product sales until 15 January 2020. The regulator will publish final rules by the middle of next year.
MotoNovo Finance, which is taking the lead in helping dealers to prepare for change is keen to ensure that dealers know that the FCA has announced publicly that this is not the case.
SMCR is arriving hot on the heels of the regulator’s final report on motor finance sales practices which indicated that from next year when final rules are published, motor finance sales commissions linked to interest rates– so called Difference in Charges arrangements – will, in all likelihood, be banned outright.
The SMCR introduces a new level of accountability for finance professionals, a holistic approach through which knowledge, skills and education are considered critically important.
Early FCA investigations detailed in its interim report on motor finance flagged up concerns associated with some commission arrangements which the regulator thought may be incentivising brokers to arrange PCP finance at higher interest rates.