Over the last few years, finance companies and manufacturers have really clamped down on the practice of un-franchised and rogue agents who trade in vehicle contract hire, finance and leasing options.
However, the “Bedroom Broker” practice has still been very much alive and kicking. Until, that is, April 1st of this year.
New FCA Rules
From this date, the Financial Conduct Authority stepped in.
Old Credit Broker Licences that were previously granted by the Office of Fair Trading are now no longer valid; all motor traders selling finance have had to apply to the FCA for an interim licence for continuance of business.
Just like the insurance sales trade, any motor trader who has been approved for an interim permission licence will then be required to apply to become approved in full by the FCA.
Alternatively, they could just choose to act as an official “appointed representative” (which is the route that many motor traders may take).
Why the finance and leasing industry needed regulating
The main reason that so-called “Bedroom Brokers” were creating such a problem is that they were trading in high-value commodities and offering little or no fallback for the customer when things went wrong.
And go wrong they often did…
- What happens if your dealer ceases to trade and along with them goes your deposit?
- What happens if you need to cancel and they won’t refund your initial payment?
- What happens if your car is delayed – will they keep you mobile with a temporary car solution?
Until April 1st, there was simply no customer protection and no definite answers to these questions.
Finding a reputable leasing supplier
Any company on the new FCA register will have passed the initial checks – you can find out if your chosen leasing company is on the interim register by clicking here.
There will ultimately be less choice of broker as a result of the new rules; not all traders will apply and quite a few will be rejected.
Compass Contract Hire Limited have been granted an interim licence, as you would expect from a company that is a member of the BVRLA and are an accredited franchisee of Network Vehicles, who are a specialist division of the world’s largest fleet management company, LeasePlan. Their reputation and longevity speak for themselves.
Do we support the new FCA regulation of finance sales?
Although it is likely that for many leasing companies (and motor traders in general) the introduction of this new scheme will mean more paperwork and scrutiny – which, less, face it, nobody really wants – we do feel that these changes can only be a good thing in the long term.
Pushing out some of the more unprincipled brokers who offer no security for the client can only be a thing worth celebrating.
So we, for one, don’t mind the paperwork if the FCA manage to stamp out bad practices.
For impartial advice and guidance on your next vehicle speak to a Compass Contract Hire Limited – contact them on 02392 228070 or click here for a free of charge call back.