Landmark Court Ruling Disrupts Car Finance Industry: What You Need to Know

The car finance sector is reeling from landmark ruling by the Court of Appeal, which found that motor dealers offering loans to customers must disclose commissions to gain fully informed consent. This decision has profound implications for the industry, affecting lenders, brokers and car dealerships alike.

What is the court ruling on car finance?

A court ruling now requires car dealerships to disclose commissions from lenders to customers. This has led to operational disruptions and potential compensation claims costing the industry billions, impacting companies like Close Brothers and Honda Finance Europe. They must now comply with increased transparency requirements and regulatory scrutiny.

How does this affect lenders?

As a lender, this ruling means you’ll need to fully disclose any commissions paid to?dealerships?and gain?customers’?consent?before finalising finance agreements. This increases transparency but also requires updating processes and documentation to ensure compliance. There’s a risk of significant compensation claims and regulatory scrutiny, which could impact your financial stability and operations. It’s crucial to adapt quickly to avoid legal repercussions and maintain customer trust.

How does this affect car dealers?

As a car dealer, this ruling means you’ll need to disclose all commissions you receive from lenders to customers before finalising any loans. This requires a review and update of your current processes and documentation to ensure compliance with the new transparency requirements.

Operational Disruption: You might face temporary disruptions as you adjust to these new rules.

Financial Liability: There’s a potential risk of compensation claims if past deals didn’t include full disclosure.

Regulatory Scrutiny: Expect increased oversight from regulators, meaning you must stay on top of compliance to avoid penalties.

How can you remain compliant?

Here at TCG, we have developed a compliance app which will ensure your business remains compliant, completely free of charge. The app allows car dealers easy automation to stay in the clear in offering car finance, sorts all documentation and compliancy and even comes with a test drive solution.

Full article below:

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