The FCA’s motor finance focus reveals the importance of robust oversight

How technology can help

On 11th January 2024, the FCA announced plans to issue S166 Requirement Notices to several motor finance firms over historical sales practices.

The notice raised new concerns over discretionary commission agreements, which were banned in 2021, as the regulator felt they ‘give motor finance brokers/dealers an incentive to raise customers’ finance costs’.

As a result of two recent adjudications by the Financial Ombudsman Service (FOS) that found firms have been rejecting almost all complaints, the FCA is expecting a significant increase in the volume of complaints in this area.

In response, the FCA now intends to conduct a full review of complaint handling and is expected to:

Issue S166s (under powers granted by the Financial Services and Markets Act 2000) to a number of motor finance providers.

Suspend the eight-week rule for responding to relevant motor finance complaints.

Consider next steps for providing compensation if deemed necessary.

The FCA’s upcoming motor finance review: how should firms respond?

The key message from the FCA’s commentary is around differences in firm and customer perspectives on discretionary commission arrangements. This is reminiscent of the regulatory work conducted around payment protection insurance (PPI), which turned into a major initiative for the regulator – whilst it’s not possible to accurately size this right now, the emerging consensus is that it could be similar in size and cost to PPI.

Needless to say, it’s time for the motor finance firms to take a closer look at their frameworks and practices, and to assess the size of the potential impact of the regulator’s planned work with regards to their own past business.

But that’s not all: post-Consumer Duty implementation, the news also serves as a real-world case study reflecting the importance of robust oversight going forward.

Indeed, with increased regulatory scrutiny and tighter consumer care standards – spearheaded by the FCA’s ‘show me, don’t tell me’ approach to supervision – it’s more important than ever that firms are able to keep an airtight audit trail of their client-adviser conversations.

Build an oversight strategy that’s fit for the future with Recordsure Capture

In a work environment where customer conversations take place in a variety of settings – be it traditional desk-based face-to-face meetings, out and about on the shop floor or online meetings – keeping a reliable, secure record of exactly what’s been said and when, has proven to be an age-old logistical challenge.

And despite the Consumer Duty adding new regulatory pressure on businesses to deliver clear evidence of their advice process to drive good outcomes for customers, many firms are still relying on paper-based meeting notes to support their compliance reporting. Is there a better way?

With Recordsure Capture, you can change the way you record and evidence your customer conversations

Recordsure Capture is our pioneering app designed specifically to create  recordings of all your in-person and online spoken interactions. Capture’s been labelled a ‘game changing solution’ by the tier 1 banks and central government that already use it to capture conversations.

Available for iOS, Windows and Android devices, this tamper-proof tool is the perfect way to maintain an authoritative, infallible record of your customer interactions for all your regulatory reporting need – and can record even without an internet connection.

Thanks to our patented technology, recordings are automatically uploaded to our secure, easy to search web-based portal for ease of review and play back.

Explore the full benefits of our groundbreaking RegTech with ConversationReviewAI

With Recordsure Capture, you can finally have peace of mind that you’ll never have to miss a conversation again – and discover the game-changing power of having  authoritative, high-quality records of your in-person and online customer conversations for whenever you need them. But it doesn’t end there: with our ConversationReviewAI modules, you can benefit from best-in-class AI solutions that transform your oversight and deliver deep insight into emerging risks:

Transcribe: Auto generate an accurate text transcript of your customer conversations using best-in-class technology – with transcript word search capability to pinpoint specific terms or phrases

Classify: Unique smart segmentation with industry-leading accuracy rates segments your conversations by topic, enabling reviewers to complete call reviews in half the time

Assure: AI designed for financial services assesses and scores 100% of conversations with 90+% accuracy before a human gets involved so reviewers can be directed straight to the parts of conversations that have been scored as non-compliant

Ready to revolutionise how you capture and review your customer conversations?

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