FCA chief executive Nikhil Rathi has called for clarity during a speech last night where he addressed the motor finance judgement.
During the speech, held at the Investment Association Annual Dinner on October 29, he mentioned both Friday’s court decision and how that impacts the FCA’s (Financial Conduct Authority) own investigation into car dealer finance commissions.
‘First and foremost, we need clarity on whether this is the courts’ final word on the issue,’ Rathi said.
Those lenders involved intend to appeal and he explained that ‘when they do, the Supreme Court decides quickly whether it will take the appeal and, if it does, whether it agrees with the Court of Appeal.’
The FCA boss said it had been in talks with the lenders involved, the wider sector and government as it tries to identify what action is needed.
The motor finance industry has been working with legal experts since Friday to establish the best route for their businesses and car dealers, while updating their systems and processes to meet this.
While the industry has called for time to ‘take stock’, Rathi said he understands but ‘equally, the Court of Appeal has made the law clear and, if that is not challenged further, then firms need to handle any complaints in line with that’.
He said: ‘In the meantime, our focus is on ensuring that customers receive fair treatment in line with the law and that the market for motor finance continues to function well, recognising that over 2m people rely on it each year to buy a car.
‘We are encouraging firms to engage with us as they consider the impact the court judgment has on their products and services, and we are grateful for the way firms have acted responsibly so far.
‘We are working closely with the financial services sector, the Financial Ombudsman Service and the government to understand any wider consequences and further steps needed.’
He added: ‘While the case itself was not focused specifically on discretionary commission, it clearly relates to our work to determine whether motor finance customers have been overcharged because of the past use of discretionary commission agreements.’
The FCA has now decided to pause until December 2025 its deadline that firms had to respond to complaints, and Rathi said some are asking for this to be delayed further and include other complaints about motor finance.
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