Consumer Credit Regulation
On 1 April 2014, the Financial Conduct Authority (FCA) took responsibility for regulating consumer credit. A new rule book is now in operation for the 50,000 firms involved, and the challenges facing members will remain an FLA priority until we are certain that the regime has bedded down without a detrimental effect on the credit markets. Members can access further information here.
The FCA’s General Insurance Add-On market study
As part of it this work, the Financial Conduct Authority announced in March that it planned to prevent the completion of guaranteed asset protection insurance (GAP) purchases at the point of sale. This means that the consumer would have to confirm at a later date that they still want the product. The regulator wanted feedback by 8 April. We will consider the findings and take a view in consultation with members.
The FCA’s thematic review of sales incentives
As part of its ongoing work on incentives, the Financial Conduct Authority (FCA) published guidance in January 2013 – the key conclusion of which was that firms must manage any risks arising from incentive schemes to prevent mis-selling and bad outcomes for consumers. Further thematic work published by the FCA in March 2014 found sufficient improvements to avoid further intervention at this time.
The FCA will most likely repeat the same kind of work with consumer credit providers now it has taken responsibility for regulating this new area. We will provide members with regular updates.
Putting customers at the heart of what we do
By the end of 2013, over 2,240 dealerships (including 40 of the largest 50 dealer groups) were participating in the FLA’s Specialist Automotive Finance (SAF) programme to raise the understanding of motor finance products among dealership sales staff. The SAF competence test must be retaken every 12 months to ensure that salespeople’s knowledge is up to date, and those dealers who voluntarily put all of their finance staff through the assessment are awarded ‘SAF Approved’ status. We are now working with the ifs Institute of Financial Services on a more advanced qualification.