Context
Most of the topics discussed by the regulators in this group are in the pensions and investment space. However, one issue identified in the report relates to motor finance commissions, which is included as an example under the “Sharing data, insight and expertise to inform decision making” section. The FCA’s Consumer Duty is also mentioned, under the “Ensuring a fair landscape” section of the report.
Key points to note
Motor Finance Commissions
The Financial Ombudsman Service has been receiving more complaints about the payment of commission arising from the sale of motor finance products. In many of the complaints customers say they did not receive adequate information about the commission paid to their credit broker (often the car dealer) by their lender.
Complaints in this area often reference the FCA’s Final Findings on Motor Finance and its subsequent decision to ban certain commission models which commenced in January 2021, as well as the judgment in the Court of Appeal case for Wood and Pengelley in March 2021.
Complaints data and casework insights from the Financial Ombudsman Service have been shared with the FCA and in Consumer Credit Trade Body Forums. The Financial Ombudsman Service has also communicated its expectations about the type of information required from firms and key concerns when looking at these complaints.
Consumer Duty
The FCA’s Consumer Duty introduces a new Consumer Principle that requires firms to act to deliver good outcomes for retail customers and accompanying rules, guidance and non‑handbook guidance. The Consumer Duty aims to tackle practices by firms that cause harm, including presenting information in a way that exploits consumers’ behavioural biases, selling products or services that are not fit for purpose, or providing poor customer support.
The Financial Ombudsman Service and the FSCS have worked together with the FCA to review drafts of the FCA’s consultation, policy statement, instruments and non-handbook guidance. The FCA held a workshop for the Financial Ombudsman Service on the Duty. The FCA and the Financial Ombudsman Service have worked together to meet with external stakeholders across the industry, to ensure there is a consistent understanding of the Duty. This has included industry events in 2022 where both the FCA and the Financial Ombudsman Service were represented on a panel of speakers
Next actions
None – for information and awareness.