Chancellor Rachel Reeves’ Mansion House address revealed a process that sees the Financial Ombudsman Service (FOS) and Financial Conduct Authority (FCA) ask for input from consumers and businesses to improve their effectiveness.
iVendi noted that acknowledgement of the problem is ‘welcome’ but faster action is required to solve immediate issues caused by the recent court of appeal decision on commission disclosure.
James Tew, CEO of iVendi, said: “Everyone in motor finance will have been pleased to hear the Chancellor seemingly recognise that change is needed around the FOS and FCA to provide greater fairness and clarity to both customers and lenders, and avoid the kind of confusion we have seen in recent weeks.
“We cannot have a repeat of a situation where lenders have followed all of the official guidance but still find themselves vulnerable to mass claims.
“However, while future improvements are welcome – the consultation runs until the end of January – motor finance companies need more certainty right now and we should be making that case as strongly as possible.
“The whole used car sector should be working to proactively defend and promote motor finance in order to influence how the commission disclosure situation develops in the coming weeks and months.”
Tew noted the importance of communicating that motor finance providers were in favour of commission disclosure.
He said: “We have links to almost every business in the motor finance sector and almost all are in favour of commission disclosure, both because of the clarity it provides for consumers and to avoid the kind of situation we are seeing at the court of appeal.
“Most of these companies also think that, over time, disclosure will lead to greater competition in the market and eventually, both a reduction and general levelling in the commissions paid. While this might mean the price of cars rising slightly as dealers look to retain margin, it again adds to overall transparency.”