Get ready for more regulation

The past few years have been taken up with becoming acquainted with the FCA, bringing compliance standards up to speed.

From lenders and dealers perspectives, this involved a huge amount of effort and expenditure – both in terms of cash spend and in terms of man hours required.

If this period could be termed the ‘Getting to know you’ phase of life under the FCA, we appear to be moving towards a more established relationship, with the FCA (and other regulatory bodies) having a better understanding about motor finance.

Compounding the situation, a number of European directives are set to come into force in the near future, just as the FCA’s The Senior Managers and Certification Regime (SM&CR) gets implemented in consumer finance, and it looks beyond its initial exploratory review of the market.

The next few years look set to be filled with SM&CR, GDPR, PSD2, and whatever other acronyms the motor finance exploratory review brings up.

Each of these should be taken seriously by anyone looking to lend money in the consumer credit space, and each has the potential to drastically alter the shape of the companies under them

If anyone doubted that more regulation was destined to be the new normal, it seems that the FCA and government are keen to prove them wrong. Hopefully lenders laid the ground work to cope with this while applying for their authorisation.

The impression I’ve had is that a few smaller players got through the authorisation, thought ‘phew, that’s that then,’ and slacked off on the regulatory front.

Anyone who has done this is likely in for a shock as these big pieces of regulation come into force over the next few months. 

And now it is more important than ever that lenders are behaving in a compliant, fair way. Papers are lining up to take shots at motor finance.

Every industry has a few bad apples, as the saying goes, but in today’s world, with the amount of scrutiny motor finance is under, it will only take a couple of instances of bad practise in the industry to really drag the name of everybody else down.

Thankfully so far the papers haven’t really found much which would cause alarm for those in the know. But they’re looking.