FCA on motor finance market

The Financial Conduct Authority tells us: 'We are looking at the motor finance market to ensure that it works well and to assess whether consumers are at risk of harm.' It goes on:

'Consumers’ use of motor finance has grown rapidly in recent years, with many credit products now available.

'As we set out in our Business Plan 2017–18, we are looking at this market to develop our understanding of these products and how they are sold, and to assess whether the products cause harm to consumers and if the market is functioning as well as it could.'

Details of the Authority's work, which naturally focuses on PCPs, are on its webiste (link in the first line above). It promises to publish an update in Q1 2018.

FCA investigates 'irresponsible' car loans

The Financial Conduct Authority is investigating the car loans market, concerned that borrowers do not have to show that they can afford repayments. Basic credit checks may be supplemented by the sort of tests usually associated with mortgages, if the FCA considers it necessary. The amount being borrowed to finance new cars has trebled over the past eight years. The FCA's statement is in its business plan for 2017-18 - on page 74, if you are interested enough.

The Telegraph reports that the Bank of England is concerned that the trend could precipitate a financial crash if not brought under control. The paper also reports that an investigation performed by its journalists revealed that sales people were encouraging customers to spend their entire disposable income on 'pay monthly' deals for cars worth more than they earned in a year. Experia also warn that their data suggest that households with 'stressed' incomes account for a large part of the growth in 'pay monthly' car purchases.

In 2014 the FCA made affordability checks for mortgages more stringent, requiring more information about spending, amid fears that borrowers were over-stretching themselves to get on the housing ladder, and the same sort of checks might now be extended to car loans. The FCA notes that there may be 'a lack of transparency, potential conflicts of interest and irresponsible lending in the motor finance industry.'

See also Motor Trader's report, which in turn refers to an interesting posting on the Bank of England's "Bank Underground" blog (who'd have thought?) about the motor finance scene.

'via Blog this'

NFDA accuses FCA of being too expensive and complicated | Motor Trader

Motor Trader  reports that the National Franchised Dealers Association has told the Chancellor of the Exchequer in its budget submission that the Financial Conduct Authority is “financially burdensome and complicated” for dealers. It says that the new Authority charges dealers five times as much as the OFT used to charge, and in addition it is not as helpful either in person or in its published guidance, so dealers are also obliged to incur costs seeking professional assistance.