CarsVansandBikes.com logo
CarsVansandBikes.com logo
in association withThe Sun
Porsche
11 January 2024, 11:10

Regulatory Investigation into Past Discretionary Commissions Paid to Car Dealers and Finance Brokers by FCA

In 2021, the Financial Conduct Authority Eliminated Discretionary Commission Models to Prevent Broker-Driven Interest Rate Hikes in Motor Finance, Mandating Firms to Amend Detrimental Procedures.

Today a full investigation has been opened on the following basis:

"There have been a high number of complaints from customers to motor finance firms claiming compensation for commission arrangements prior to the ban.

Firms are rejecting most complaints because they consider that they have not acted unfairly nor caused their customers loss based on the applicable legal and regulatory requirements.

The Financial Ombudsman Service has considered some complaints rejected by firms. It found in favour of complainants in two recent decisions [see here and here]. This is likely to prompt a significant increase in complaints from consumers to firms and the Financial Ombudsman.

Claims have also been brought in the County Courts, some of which have been upheld. So, there is significant dispute between some firms and consumers on whether firms have breached legal and regulatory requirements.

Consequently, we are using our powers under s166 of the Financial Services and Markets Act 2000, to review historical motor finance commission arrangements and sales across several firms.

If we find there has been widespread misconduct and that consumers have lost out, we will identify how best to make sure people who are owed compensation receive an appropriate settlement in an orderly, consistent and efficient way and, if necessary, resolve any contested legal issues of general importance.

In the meantime, we are pausing the 8-week deadline for motor finance firms to provide a final response to relevant customer complaints.

The pause will apply to complaints about motor finance agreements where there was a discretionary commission arrangement between the lender and the broker and will last for 37 weeks (approximately 9 months).

We are introducing the pause without consultation from today. This is to prevent disorderly, inconsistent and inefficient outcomes for consumers and knock-on effects on firms and the market while we assess the issue and determine the best way forward. In deciding next steps, we will be informed by our statutory objectives to protect consumers, ensure market integrity and promote competition in the interests of consumers.

It is particularly important to manage these risks because, in line with most types of consumer credit, motor finance is not protected by the Financial Services Compensation Scheme.

This pause will apply to complaints received by firms on or after 17 November 2023 and on or before 25 September 2024.

For example, if a firm had been dealing with a complaint for 3 weeks at 11 January 2024, the time limit for responding to the complaint would be paused for 37 weeks until 25 September 2024. When the pause ends, the firm would have the remaining 5 weeks to provide its final response. If a complaint is received during the 37-week period, the 8-week deadline will expire on 20 November 2024.

The 37-week period will enable us to analyse the issues and decide what, if any, further action including legal steps are necessary. We may need to extend the pause if more time is required to make sure complaints are dealt with properly and consumers who might be owed compensation receive it.

Consumers will also have up to 15 months to refer their complaint to the Financial Ombudsman, rather than the usual 6 months. This extension applies to complaints where the firm had sent a final response in the period beginning with 12 July 2023 and ending with 10 January 2024, or where the firm sends a final response during the period beginning with 11 January 2024 and ending with 20 November 2024.

Consumers can find out more about how this affects them.

We plan to set out next steps on this issue in Q3 2024."

 

Notes to the editor

For further information please contact:

Sonia Mattis or Kevin Stewart at news@carsvansandbikes.com

Keep up-to-date with CarsVansandBikes.com on Twitter; @Carsvansbikes

or follow us on Linkedin: www.linkedin.com/company/carsvansandbikes

Revolutionizing Vehicle Search with Fairness and Transparency

The digital quest for the perfect vehicle—be it a car, van, or motorbike—has been transformed by CarsVansandBikes.com. Launched in 2021, this digital advertising platform has rapidly become a go-to destination for motorists seeking new or pre-owned vehicles. True to its ethos, "As easy as CVB," the platform simplifies the search process, making it more accessible and user-friendly.

What sets CarsVansandBikes.com apart is its foundational commitment to unbiased advertising. Unlike other platforms where sponsored listings skew visibility, CVB presents all vehicles without undue influence. This principled stance guarantees a transparent and fair experience, ensuring users find the right vehicle based on its merits, not its marketing budget.

Our commitment to the community is clear and steadfast: for personal consumers and private motorists, advertising on CarsVansandBikes.com is, and will always be, completely free. This initiative breaks down financial barriers and empowers individuals to sell their vehicles directly to a wide audience.

To build a sustainable, high-quality marketplace featuring both private and professional sellers, we now charge a fee to motor dealers. This balanced approach ensures we can continue to invest in and improve the platform for everyone, while honouring our original promise to our private user community.

By fostering direct connections between sellers and buyers and providing deep, detailed vehicle information, CarsVansandBikes.com goes beyond a transactional relationship. It creates an informed community where everyone is equipped to make the best possible choice.

As CarsVansandBikes.com continues to grow, its impact is undeniable. With its user-friendly interface, unwavering commitment to unbiased listings, and innovative model that keeps the platform free for private sellers, CVB represents a paradigm shift in how we find and advertise vehicles.