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FCA consultation CP19-28 Motor finance commission

FCA consultation CP19/28: Motor finance discretionary commission models

Background

  • CP19/28: Motor finance discretionary commission models and consumer credit commission disclosure
  • Published by the FCA on 15 October 2019
  • The FCA is consulting on plans to ban commission models that give motor finance brokers/dealers an incentive to raise customers’ interest rates. The FCA is also consulting on minor changes to some of its rules and guidance to ensure that many types of credit broker give consumers more relevant information about commission.

Impacts

The FCA’s extensive research into this sector has found that discretionary commission models have led to higher finance costs for consumers. Firms are also often failing to give customers timely, relevant information.

This paper consults on proposals to:

  • ban commission models that can give brokers and motor dealers an incentive to increase a customer’s interest rate
  • amend parts of our rules and guidance relating to the disclosure of commission arrangements with lenders

This consultation applies to:

  • motor finance providers
  • motor finance credit brokers, including motor dealers
  • Chapter 4 is directly relevant to many types of brokers of regulated credit and consumer hire agreements
  • this consultation will also be of interest to trade bodies representing consumer credit lenders, consumers and consumer organisations

Timeline with relevant dates to be logged on regulatory calendar

  • Consultation opens on 31 October 2019
  • Consultation closes on 15 January 2020

Next steps

Any respondents need to send comments to the FCA.

The FCA intends to publish a Policy Statement at the beginning of Q2 2020.

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