Are you ready to be Mystery Shopped?


It could be assumed the FCA will pick on the “big players” as that will have the desired impact if they need to hand out any enforcement notices for noncompliance.

Author: John McDougall
Reading time: 3 minutes

This article is 10 months old.

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The FCA are planning to conduct a point of sale mystery shop exercise in September 2021 to measure lenders’ control over their dealer network to ensure dealers comply with the regulatory requirements in relation to motor finance commission models and commission disclosure.

It could be assumed the FCA will pick on the “big players” as that will have the desired impact if they need to hand out any enforcement notices for noncompliance. Now, you could be one of the lucky ones and not be “mystery shopped”, but do you want to run that risk? Any reputable lender would have been in contact with their dealer network to ensure compliance. However, we live in the real world and during these “unprecedented times” that we live in, it may be a good idea to ensure that you, as a motor trader, are fully up to speed.

We are certain the lenders will be primed and ready for any challenge they receive from the FCA and, dare we say, attempt to “pass the buck” back to their dealer network.

Question“How many times have you received support from the lender when a consumer wants to reject a vehicle for unsatisfactory quality?” No need to share your answers! With that in mind, would it not be prudent to contact your lending partners for any clarification you require? At the very least, you can evidence you have been proactive in this space and have asked for support from your lender with regards to your regulatory responsibilities.  With the FCA’s guidance and rules not always being an “easy read”, your lender sending out a couple of emails regarding commission models and disclosure changes back in January 2021, when the rules came into force, is probably not sufficient to ensure your compliance.

In a previous update, I mentioned “the lender has a responsibility” and therefore cannot just blame their dealers for not complying with FCA regulations.

Areas for consideration:

  • Are you “prominently” disclosing the existence and nature of all commission arrangements that you have with the lender when arranging finance for your customers?
  • Does your website have a suitable commission disclosure statement?

The FCA’s objective is for consumer protection: “consumers get a fair deal and to secure an appropriate degree of protection for consumers.” Therefore, there is the potential for a breach of one of the FCA’s Principles for Businesses PRIN 6 Customers’ Interests – “A firm must pay due regard to the interests of its customers and treat them fairly.” This means the manner you deal with your customers will also be under scrutiny if you have a mystery shop visit.

If you are unsure or need assistance in relation to FCA compliance, please do not hesitate to contact us.

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John McDougall

Legal Advisor

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