Car financing crackdown

[grober]

Car financing crackdown 'to save drivers £165m'

 

[st13phil]

Something a few of us on this forum have been predicting for some time.

 

[kcsun]

No doubt with all the "sue culture" that is around now, the law firms will be chasing refunds for everyone who has ever had a PCP agreement due to unlawful overpayments??????

kc

 

[Doodle]

I can see the adverts now. "Did you have PCP? Were you promised equity at end of term? Did the salesman get a fat commission? If so, go to www.runoutofPPIclaimstoexploit.com"

 

[st13phil]

I can see the adverts now. "Did you have PCP? Were you promised equity at end of term? Did the salesman get a fat commission? If so, go to www.runoutofPPIclaimstoexploit.com"

Oh, I think we can bank on it.

And to think that it could all have been avoided if the FCA hadn’t been asleep on the job (again).

 

[Deleted member 6183]

It's possible that the FCA underestimated the problem.

They took responsibility for motor finance in 2013 and the rot had been setting in for many years, in that time they have completed a few reviews, set up a new compliance regime yet this latest review (and the one before) show up the same old issues.

The only consumers entitled to complain will be those that were mis sold and the FCA seem to be saying that mis selling is rife in the industry.

 

[Deleted member 65149]

Oh, I think we can bank on it.

And to think that it could all have been avoided if the FCA hadn’t been asleep on the job (again).

... or if people buying cars on PCP had engaged their brains before signing up to part with so much money.

 

[st13phil]

In fairness to the FCA, I think the problem practices were reasonably well established before they took on responsibility for this sector, but as you say, their repeated reviews have highlighted the same problems time after time.

One would have hoped that in six years (seven by the time the latest round of consultations complete), they would have seen to it that the consumer was better served.

 

[Deleted member 6183]

In fairness to the FCA, I think the problem practices were reasonably well established before they took on responsibility for this sector, but as you say, their repeated reviews have highlighted the same problems time after time.

One would have hoped that in six years (seven by the time the latest round of consultations complete), they would have seen to it that the consumer was better served.

I suspect that the FCA by now will have the attention, and compliance, of the better dealers and can now crack down on those who continue with their old practices.

Despite the assumptions above that this is door opener for PCP mis-selling claims the actual issue here is that dealers are setting interest rates higher for vulnerable (some say gormless) punters as they can earn more commission on the sale. This has been going on since I was last involved in the business during the 1980s and, most likely, before.

 

[st13phil]

the actual issue here is that dealers are setting interest rates higher for vulnerable (some say gormless) punters as they can earn more commission on the sale.

And the smokescreen those unscrupulous providers have hidden behind is that “the higher rate is a reflection of the higher risk of default”. Yeah, right...

 

[Deleted member 6183]

And the smokescreen those unscrupulous providers have hidden behind is that “the higher rate is a reflection of the higher risk of default”. Yeah, right...

The key is that it's not the lender choosing a higher rate based upon their assessment of the risk but, instead, it's the dealer setting a higher rate in order to earn a larger commission.

 

[st13phil]

Exactly. The dealer is effectively acting like a broker, but if you ask the end customer they think it’s the lender setting the rate, and the dealer fails to disabuse them of that misunderstanding.

 

[Deleted member 6183]

Exactly. The dealer is effectively acting like a broker, but if you ask the end customer they think it’s the lender setting the rate, and the dealer fails to disabuse them of that misunderstanding.

The dealer has also failed to communicate how he is paid to the punter and one way how the FCA hope to clamp down on the practice is by enforcing their own standards around when and how dealers disclose commission.
I strongly suspect that they will eventually start to withdraw permissions, it could be argued that this is long overdue.

 

[SlimJim]

Everyone is in business to make money. No one forced people into PCP arrangements. There were other options available. People used it as an easy way to get themselves behind the wheel of a new car. A car they would normally not have been able to afford.

 

[Fununcle]

Everyone is in business to make money. No one forced people into PCP arrangements. There were other options available. People used it as an easy way to get themselves behind the wheel of a new car. A car they would normally not have been able to afford.

But surely even though some people may have been foolish doesn't mean they should be ripped off.

 

[markjay]

Everyone is in business to make money. No one forced people into PCP arrangements. There were other options available. People used it as an easy way to get themselves behind the wheel of a new car. A car they would normally not have been able to afford.

Once a consumer buys anything in instalments and pays interest, this becomes technically Finance and as such closely regulated by the FCA.

The issue here is not the goods (or services) themselves - in this case a new or used car - the issue is that the consumer has in fact taken-out a loan, and this falls under a differer header to purchasing goods or services. Hence why the FCA feel they should intervene.

 

[SlimJim]

Yes, I should have been clearer. Any reforms that benefit the consumer are welcome. However, the compensation chasers, if there are any, should be just that, chased.

 

[Petrol Pete]

But surely even though some people may have been foolish doesn't mean they should be ripped off.

A fool and his money are soon parted...how old is that saying ?

Caveat emptor....even older

 

[Fununcle]

A fool and his money are soon parted...how old is that saying ?

Caveat emptor....even older

Cheating thieving b#stards, surely the oldest of all.

 

[pmcgsmurf]

I helped a pall move some stuff today for his mum.

Parked in the adjacent drive, a 6 year old C class, no tax or MOT and rather beaten up with every wheel dinged and big scratches/dents everywhere.
The young lass that owns it can't afford to have it fixed for MOT and can't hand it back (can't anyway without an MOT) till March next year.