Motor Trader The award-winning and longest running UK magazine for car retailing professionals. Your first stop for News, Jobs and Reports for the motor industry.
Following the court ruling on motor finance commissions, industry experts expect more guidance from the FCA on managing ‘fiduciary duty’ where there is a liability to give best advice. Experts have also expressed a desire to have the fiduciary duty point overturned.
Ian Plummer (commercial director at Auto Trader), Adrian Dally (director of Motor Finance and Strategy at the FLA), Martin Ward (partner at Eversheds Sutherland) and Jo Davis (CEO of Auxillias) discussed the implications in a webinar last week.
Plummer said: “Retailers and lenders urgently need guidance on what comes next – with swift direction to avoid harming the industry and impacting consumer confidence.”
Dally stated that the ruling was an unexpected judgement. He said: “Historically lenders were winning at least 5 or 10 to 1 in the lower courts on the broader issues. And on the narrower issues of finance win rates were much higher.
“So this is very unexpected. We have now got clarity, albeit unexpected.”
Retailers and brokers owe a duty to give advice, recommendation or information on a disinterest basis and a fiduciary to their customers when providing finance.
Disclosure is an important area of improvement as businesses need to ensure statements are describing their role and what they are doing for the customer. This includes the nature and the amount of commission.