FCA is consulting on changes to its rules that would ban the way in which car retailers and other motor finance brokers receive commission. It is concerned at practices that link commission to the interest rate customers pay – which creates an incentive for the broker to act against customers’ interests. FCA’s proposals would ban this practice and also amend the rules on how customers are told what commission they are paying.
FCA plans to introduce a new definition of “discretionary commission arrangement” and make changes to CONC 3 and 4 in respect of the description of commission arrangements. A new CONC 4.5.5 would ban discretionary commission arrangements in the motor finance market.
Consultation closes on 15 January 2020 and FCA will make final rules over the summer.