I thought a football analogy was apt as Euro 2024 has just kicked off in Germany.
Let me explain, back in March 2019, the Financial Conduct Authority (FCA) produced a paper called, “Our work on motor finance – our final findings” .
A key part of this paper was included in the Executive Summary, with the FCA stating the following:
“In particular, CONC 1.2.2R requires lenders to take reasonable steps to ensure that persons acting on their behalf comply with CONC. This includes compliance with rules relating to disclosure of commission. Our work suggests that some lenders may be unduly reliant on contractual requirements and the provision of standard documentation and procedures and may not monitor brokers sufficiently closely or act where issues are found.”
Over the last couple of months, our members have forwarded to us correspondence they received from their lenders that asks the following:
“We need your support to help evidence commission disclosure.
The requirements for disclosing commission to customers have varied over the years. We’re busy working with our partners to gather evidence that customers were made aware of commission payments at point of sale over the following time periods. We’d be grateful if you could send us examples of documentation which evidence commission disclosure.”
The time period being from 2007 to the present day!
“Following extensive publicity, we are expecting to receive more complaints and would ask that, to reduce inconvenience to you, as a one-off exercise you seek to provide copies of all IDDs (Initial Disclosure Documents) that you have on record.”
This is a clear admission from two large motor finance lenders that they have no clue as to what their dealer networks are doing and have not had since 2007! It would have made more sense if the lenders had sent these emails in 2019, however, reacting five years later does raise more questions than answers. This looks like a massive own goal by the lenders, and I do not think the FCA will be referring the matter to VAR!!
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We await the outcome of the FCA’s review which is due in September of this year.
If you are unsure how you should respond to these requests, please do not hesitate to contact Lawgistics.
