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Motor Finance


Monitoring the Code

Monitoring the Code is an important aspect of the Group’s work.  The Group uses three main methods to monitor FLA members’ compliance with the provisions of the Code:

Complaints

The FLA compliance team maintains a record of the number and type of complaints made by consumers, and the results are reported regularly to the Group. This information is important in identifying potential emerging trends in relation to non-compliance with the Code.

The complaint statistics are regularly updated to allow the Group to monitor the levels of complaints against individual FLA members.  Where evidence of any potential breaches arises, the Group works with the FLA’s Code Compliance Manager to agree on appropriate action.

Further information on the complaint statistics for 2015 is given later in this Report.

The Statement of Compliance

It is a requirement of the Lending Code that every year all relevant FLA members complete a Statement of Compliance (“the Statement”) to confirm that they comply with the Code’s provisions.

Before signing the Statement, members are required to undertake an audit of their operations so that they can provide accurate information about how their organisation complies with the Code.  This process helps to identify any difficulties members may have encountered throughout the year, which should then be disclosed in the Statement.  This is used by the Group to identify areas where additional information or guidance might be needed.  Members are also encouraged to declare examples of best practice so that they can be shared with the wider membership.

The high level of compliance reported in the 2015 Statements is a strong indicator of members’ continuing commitment to the FLA Lending Code.

Compliance Statement Review Visits

Inspection visits are an essential feature of Code monitoring.  Visits to member firms help ensure that their processes and operations comply with the provisions of the Lending Code. The inspections are carried out by an independent  Reviewer, to ensure transparency and autonomy.   Seven inspection visits were undertaken in 2015.

A risk model is used to select the members to be visited.  The choice is also influenced by the Statement of Compliance (see above), by any complaints received, by the size of the company, and by other relevant factors such as how long the firm has been a member of the FLA.

A report is sent to the firm following the visit, with recommendations for changes or improvements to their processes, as may be necessary.

Enforcement action

The Lending Code Group will take enforcement action, when required, against members who consistently do not meet the provisions of the Code.

Minor infringements are usually dealt with by the FLA Compliance Manager.   More serious breaches of the code will be subject to one or more of the following:

  • a written warning;
  • a request for written submissions on compliance from the member; or
  • a meeting with the member to discuss non-compliance.

If none of the above measures proves satisfactory, the Code Group can refer serious breaches of the Code to the FLA’s Disciplinary Panel.

There were no serious breaches of the Code in 2015.

Disciplinary panel

The Lending Code Disciplinary Panel deals with disciplinary matters arising from non-compliance with the Lending Code.  The Panel will convene only if the Code Group’s efforts to resolve a breach of the Code have been unsuccessful, and where a member firm’s actions in not resolving the breach may lead to serious consumer detriment or significant reputational damage to the Code.

 The Disciplinary Panel may:

  • impose a formal or informal warning;
  • make recommendations as to future conduct;
  • recommend to the Board that the member is expelled from the FLA.