Financial Conduct Authority (FCA) chief executive Nikhil Rathi joined Martin Lewis’ Money Show to address shortcomings about the regulator, as well complaints against car finance lenders.
The show was broadcast at 8pm on ITV on December 10 and Rathi joined on stage to make clarifications and address some questions from viewers, as well as Lewis directly.
The national television attention to the subject will bring even greater focus to the topic and follows on not only from the FCA’s investigation on discretionary commission arrangements (DCA), but also the shock ruling from the Court of Appeal in October, which determined that motor finance brokers must provide full disclosure on commissions when arranging car loans.
Lewis applauded Rathi, as did the audience, for agreeing to answer questions live on the show.
Should the FCA take responsibility on comission disclosure?
However, Lewis did ask whether this Court of Appeal ruling calls into question the FCA’s own rules at the time.
Lewis said on the show: “In relation to comission disclosure, firms haven’t breached the regulator rules that were in place.
“Now they’re being told they’re acting illegally by the Court of Appeal. Is some of the responsibility not the FCAs?
“Were your rules good enough?”
Rathi responded: “We banned DCA in 2021. The court has been looking at common law and that’s the area that is disputed around comission disclosure.
“We’ll have to see what the Supreme Court says. Our rules work alongside the law, we don’t decide what the law is.”
Lewis also asked if the result of this latest ruling on comissons disclosure, as well as the investigation into DCA will have a knock-on impact to make car finance more expensive for all as a result of potential compensation claims running into the billions.
Rathi said: “Some of that will depend on where the courts get to.
“But we have to get to a point where the car market is functional car finance is still affordable for millions of people each year.
“That’s why we want to gather information and see where we are.”
Lewis went into detail about how customers can go about complaining to car finance firms about DCA, as well as about comission disclosure.
His advice, if a customer has been affected by DCA, is to start with that and then the additional comission disclosure element will be folded into the same complaint.
For those that don’t have a DCA, Lewis said it was up to the individual to decide if they feel like they didn’t get good value, despite not knowing the full amount of comission a dealership may have made.
Rathi agreed: “If you’re satisfied with the finance deal, we’re not suggesting you should complain about comission disclosure.
“However, if you do have a complaint with it, you should go ahead and complain.”
