The Financial Conduct Authority (FCA), the UK\u2019s financial regulator, has announced a crackdown on the car financing industry, saving drivers \u00a3165 million.<\/p>\n
The regulator intends to ban the manner in which car dealers make a commission on sales, with some dealers making a commission on the interest rate of the loan, which is set by them.<\/p>\n
As a result, some retailers take a commission on the interest rate that they charge customers who take out a loan through car financing, which means that the higher the interest rate, the more commission they make.<\/p>\n
The watchdog is also proposing changes to how customers receive information about the commission they pay, stating that this is \u201cto ensure that they (customers) receive more relevant information).<\/p>\n
A report by the regulator recently found that the car industry\u2019s system of allowing dealers to set their own interest rates was costing consumers millions of pounds per year, with only a small minority of brokers informing customers of the commission they would make on the loan.<\/p>\n
Christopher Woolard, Executive Director of Strategy and Competition at the Financial Conduct Authority, said: \u201cWe have seen evidence that customers are losing out due to the way in which some lenders are rewarding those who sell motor finance.<\/p>\n
“By banning this type of commission, we believe we will see increased competition in the market which will ultimately save customers money.”<\/p>\n
The FCA will consult on the proposals until 15 January 2020, with final rules set to be published in the second half of 2020.<\/p>\n","protected":false},"excerpt":{"rendered":"
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