Car financing crackdown ‘to save drivers £165m’
The Financial Conduct Authority has announced a crackdown on the car financing industry which it claims will save drivers £165m. It says that some dealers make commission on the loan’s interest rate, which they set, something which “creates an incentive for brokers to act against customers’ interests”. Some brokers and car retailers make a commission on the interest rate they charge customers who take out a loan to buy a car. The higher the interest rate, the higher the commission. “We have seen evidence that customers are losing out due to the way in which some lenders are rewarding those who sell motor finance”, said Christopher Woolard, executive director of strategy and competition at the FCA. By banning this type of commission, we believe we will see increased competition in the market which will ultimately save customers money”. The FCA will now consult on the proposals until 15 January next year and plans to publish final rules l ater in 2020.