Dealers need to be ready for a greater level of consumer interest in their finance commissions, driven by increased media interest and new FCA regulations.
This is according to MotoNovo Finance, who highlighted a recent article that suggested consumers could save a typical £1,100 on their car finance by questioning commission rates.
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The FCA’s new CONC rules are also intended to ensure consumers have better knowledge of dealers’ finance commissions and are ‘more likely to engage with what is on offer’.
The updated CONC rule requires dealers to ensure customers are aware of the existence of any commission, fee or other remuneration ahead of any finance agreement being finalised. The prominence required in disclosing the existence of commission will inevitably lead to more people asking; ‘how much?’
The right to access commission details is not new, according to MotoNovo, but in light of the other changes and inevitable publicity, dealers should anticipate more requests for full commission disclosure, perhaps more especially as showrooms re-open.
Reflecting on the potential for increased customer interest in dealer finance commission, Stephan Bothma, MotoNovo Finance’s chief risk officer, said: “Dealers must maintain a written evidence trail to prove that this information and broader commission disclosure requirements have been provided on a timely basis. Without this, defending any subsequent legal claims could be difficult.”
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By GlobalDataThe commission to be disclosed by dealers to customers must be accurate, or if the precise amount is not known, must reflect the likely amount and it must include any commission or fee or other remuneration payable to the dealer/group by the lender involved.
Bothma added: “Commission disclosure is an ongoing risk. We know claims management companies have been increasingly active in motor finance. Compliance with the new commission disclosure rules and appropriate evidence is critical because accountability lies primarily with dealers and brokers.”
MotoNovo recently published the results of its Dealer Pulse 2021 survey, highlighting the key points focused on the impact of Covid-19.
