UK Financial Conduct Authority: Key Considerations In Implementing A Possible Motor Finance Consumer Redress Scheme
We're setting out some of the things we need to consider if we were to introduce a redress scheme as part of our review into motor finance commission arrangements. More than 2 million used and new vehicles are bought using motor finance each year. We want to make sure the motor finance market functions well, with effective competition, so consumers can get a fair deal. Before January 2021, some motor finance lenders allowed brokers (usually car dealers) to adjust the interest rates on financing deals offered to customers. The higher the interest rate, the more commission the broker received. This was known as a discretionary commission arrangement (DCA), and we banned this practice in the motor finance market in 2021. There have since been a high number of complaints from customers about firms failing to disclose details about commission arrangements before the ban. Firms were rejecting most of these complaints, because they believed they haven’t acted unfairly and haven’t caused customers to lose out. Our review
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