In Focus Collections
So, they are putting a stake in the ground
to say that ‘yes, this is grey and this is how, going forward, we will interpret the current rules’. That’s very useful because we now have greater clarity. The FCA’s proposed new rules on commission disclosure are, therefore, intended to clarify the position. It is, though, important to remember
that the FCA report does not say that the industry has been non-compliant on commissions. They said that it was previously industry practice to do things in a certain way, but had the industry been doing things differently, consumer benefits would have accrued. The FCA’s proposed new rules on
discretionary commission models are, therefore, intended to consolidate those consumer benefits.
Appropriate regulation Many have questioned how appropriate current legislation is, and this is not covered in the FCA’s motor finance review. But it certainly is a long-term issue.
December 2019
For example, the primary legislation we
have inherited goes back to the 1970s, but was actually written with 1960s assumptions in mind. One of the effects of this is that there are
a range of products on the market to meet the range of consumer needs, but these have different regulatory conditions attached to them, not always for good contemporary reasons. This is partly because the Consumer Credit Act (CCA) reflects a 1960s view that all customers want one vehicle on a permanent basis, and to own it. But today, things are different. In a rural
area, parents may still want to own a vehicle outright because it is their transport to get to town every day. But in an area like Central London,
perhaps their grown up children may prefer to use services like a car club when they want to drive home to see their mum and dad, because it would not make sense to own a car outright and have it parked somewhere for five days a week unused. Vehicle usage needs are now much more
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It is, though, important to remember that the FCA report does not say that the industry has been non- compliant on commissions
diverse, and finance and leasing models are evolving in line with those needs. The CCA is not prepared for this, and
we believe that it needs to be amended in order to allow innovation to meet twenty- first century consumers' needs. The range of twenty-first century products, from personal loans to HP, PCP, and hire should, moreover, be equally treated when it comes to consumer protections. That would then also have the effect
that products would be simpler and easier to understand, and the risk of a miscommunication or misunderstanding by consumers would be reduced. CCR
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