Changes Could Come Sooner for Drivers
Drivers could enjoy fixed rate motor finance thanks to the findings from a Financial Conduct Authority report. It found that there were three key areas where change is likely to occur – removing the Difference in Charges (DiC) types of commission, more transparency when it comes to finance and more careful checks on affordability.
These changes could come sooner rather than later for motorists, but the changes are inevitable, with some dealers already using this single fixed interest rate. It also looks as if it will become the norm. The only negative for the broker is that they will be unable to control the interest rates, which they in the past would have varied and ultimately have enjoyed increased commission. Alongside this change, there may be a requirement to publicise commission levels.
There have been concerns about commission in finance. This relates to the use of commission models that connect the commission for a broker to the interest rate offered to the customer. This usually gives brokers the scope to set whatever interest rate they choose. However, the report states that this produces conflicts of interest, and it also brings about incentives for the broker to set a much higher interest rate for the customer.
Consumers Are Being Overcharged by Millions Annually
The Financial Conduct Authority reckons that on a car finance agreement of £10,000, the customer could be paying around £1,100 more in interest payments over the four years that the agreement is in place. Consumers are believed to be overcharged around £300m annually – that’s according to Jonathan Davidson, who is the FCA’s executive director of supervision for retail and authorisations.
According to The Express, drivers in the UK could see a drop in their car insurance premiums as a result of a review to a compensation rule. If you own a business and require motor trade insurance for your vehicles, then quotemetoday.co.uk/motor-trade-insurance will offer a friendly, professional service.
The FCA also found that where disclosures of commission were made, the figures were not always easy to understand, with the result that customers may not have enough information at hand to allow them to make informed decisions on such important issues as finance.