Clampdown on car finance commission 'to save drivers £165m'
Motorists are predicted to save about £165 million a year under new proposals from the financial regulator to ban dealers from taking commission linked to the interest rate on car financing.
Car finance brokers can currently be paid higher commission when customers pay higher interest rates. The Financial Conduct Authority (FCA) says this provides an incentive for brokers to set higher interest rates, putting customers at a disadvantage.
Now the FCA wants to ban this type of commission, in a move it says would save consumers £165 million a year.
It also wants to introduce new rules to make sure different types of credit brokers, including car finance brokers, give customers more relevant information about the commission they're paying.
The FCA will be consulting on the proposals until 15 January 2020 and says it plans to publish final rules later in 2020.
See our Car Finance guides for more info.
What does the regulator say?
Christopher Woolard, the FCA's executive director of strategy and competition, said: "We have seen evidence that customers are losing out due to the way in which some lenders are rewarding those who sell motor finance.
"By banning this type of commission, we believe we will see increased competition in the market which will ultimately save customers money."
Get Our Free Money Tips Email!
Have your say
This is an open discussion and the comments do not represent the views of MSE. We want everyone to enjoy using our site but spam, bullying and offensive comments will not be tolerated. Posts may be deleted and repeat offenders blocked at our discretion. Please contact firstname.lastname@example.org if you wish to report any comments.