Following on from our June 2017 article in Motor Finance on the FCA’s earlier announcement that it was looking into lending practices in the motor finance market, and at products that have become common place in the market (page 10 headed ‘Greater liquidity means lower risk’):

  • the Bank of England highlighted the risk of soaring consumer credit, and the booming car finance market (June); then its Prudential Regulation Authority (PRA) required car finance providers to assess their motor finance business in the event of another financial crisis, and any 30% fall in used car prices (amid fears that the guaranteed minimum future values under PCPs are too optimistic); then warned shareholders in manufacturers, finance arms and banks to think very carefully about the risks involved; and 
  • the FCA issued an update in August 2017 to say it was looking at the way dealers sell finance in the showroom, and aimed to introduce new rules and guidance designed to ensure that appropriate steps are taken to identify and mitigate risks from staff incentives and remuneration, with comments on its consultation paper sought by 4 October 2017.

Whilst the outcomes of these probes are awaited by dealers and car finance suppliers, for now at least, market commentators appear to be reporting that the FCA and Bank of England headlines have thankfully made almost no difference to consumer behaviour and car finance sales.