Since January this year, 38 motor dealers have received final notices that have been published on the Financial Conduct Authority website and have had their consumer credit permissions cancelled. In only the past 6 weeks, there has been at least 1 case per week, accounting for 8 motor dealers losing their permissions to offer finance to customers.
The Financial Conduct Authority gave the following reasons for the removal of the motor dealers:
In reviewing these final notices, Paul Speakman, Director of Automotive Compliance, comments: “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, as follows:
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.
Paul Speakman adds: “On the surface, it may appear to be relatively easy to submit an application for authorisation particularly for limited permissions, which covers the motor dealers credit broking activities. However, that is just the start, motor dealers need to have clear documentation and processes around “Treating Customers Fairly”, complaints procedures and financial promotions for their website and social media activity.”
Automotive Compliance is a privately owned company and has been directly authorised and regulated by the Financial Conduct Authority (FCA) for general insurance permissions since 2009, and consumer credit permissions since 2014, working specifically within the retail motor industry. They act as a Principal Firm for their own Appointed Representative (AR) network, along with supporting Franchised and Independent Motor Dealers Directly Authorised by the FCA.
For further comment, contact:
Paul Speakman or Paul Guy on 01452 671570
ArchiveSM & CR
CALL US FOR A FREE HEALTH CHECK 01452 671 570