FCA has updated on its work reviewing the motor finance sector. So far, it has drawn several comforting conclusions, including around general default rates. But the 3% of customers who have the lowest credit ratings have higher arrears and default rates. It also notes that commission arrangements could lead to dealers arranging more expensive than necessary finance options for customers, and that customers are sometimes not being provided with key information in an accessible manner.
It is now focusing on whether firms are properly assessing affordability, the commission arrangement risks, and whether consumers’ engagement with firms, including the way in which they get information, allows them to make informed decisions.
FCA will report further by September.