The UK’s Financial Conduct Authority (FCA) has intensified its investigation into the motor finance market, with the regulator’s chief Nikhil Rathi indicating the “improbability” of an empty-handed inquiry.
In a speech delivered at the Morgan Stanley Financials Conference, Rathi revealed plans to clarify the motor finance industry-related probe in a “condensed time frame”, aiming for a resolution that is both ‘robust and fair’.
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However, Rathi noted that the success of this accelerated investigation largely hinges on the cooperation of motor finance companies.
He emphasised the need for these companies to provide comprehensive data swiftly and to fully engage with the process, which may also be influenced by the pace of any related court proceedings.
Addressing the potential for mis-selling within the car finance industry, Rathi reassured that the situation is unlikely to escalate to the magnitude of the payment protection insurance (PPI) scandal.
Rathi said: “While certainty is not something I can provide today, and I cannot prejudge what we might find, I can say in my view it is improbable we will find nothing to report as we look at historic motor finance sales.
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By GlobalData“Some firms will be better placed than others. Equally, I do not anticipate this issue playing out as PPI did, not least because we have intervened early in the interests of market orderliness.”
Rathi stressed that the FCA’s timely intervention is designed to ensure that any malpractice is addressed effectively, safeguarding the interests of both the industry and consumers.
This January, the FCA announced its intention to scrutinise historical motor finance commission arrangements.
The investigation focuses on whether customers were overcharged for car loans due to open commission models from 2007 to 2021.
“We are mindful not just of ensuring that consumers are treated fairly but also our objective to ensure markets function well. And in a country where 78% of households own a car, it is obvious that we need to maintain a functioning, accessible and competitive motor finance market,” Rathi added.
While the FCA has not yet disclosed the findings of its investigation, it has promised to outline the ‘next steps’ by the end of September, The Guardian reported.
