Although the verdict will illicit change across the industry, lenders and brokers engaged with consumer duty are likely to be well-prepared, according to members of the bridging panel the FP Show 2024.
The impact of the recent court appeal case on commission disclosure will be widespread across the entire financial industry and could be more significant than PPI, panellists said at FP Show 2024.
On 25th October, the court of appeal ruled in three combined motor finance commission cases that car dealers acting as credit brokers for customers must fulfil both a fiduciary duty and a duty of impartiality in their role as credit brokers.
Panellists including Jamie Pritchard, managing director of sales at Glenhark, Michael Stratton CEO and founder at MS Lending Group, Marcus Dussard, sales director at KSEYE, Sundeep Patel, director of bridging at UTB, Leanne Ardron, head of bridging finance at LendInvest, Justin Trowse, head of bridging finance at Allica Bank and Richard Deacon, managing director of sales at Octane Capital said the verdict will force change.
Richard commented that this decision “effects everyone in the industry, not just in the lending industry, in the financial industry, regulated or unregulated,” — meanwhile, Leanne said she “can envision this being bigger than PPI.”
Leanne noted that as the effects of the court case begin to unfold, companies have started checking their policies, with conversations with the legal department are already underway to ensure all documents provide the correct rationale for any fees, such as arrangement fees or additional introduction fees charged by brokers.
Alongside clarifications and amendments, there may also be new additions to documents, as Leanne added that the team is likely to incorporate further changes in response to the verdict.
Richard agreed that working with the compliance team to ensure that all documents and disclosure forms are accurate is crucial, however, he also noted he that lenders and brokers already involve with consumer duty should have a head start.
“If you’ve done consumer duty correct, then when you go through the record of documents you should find yourself in a good space because you’ve already done quite a bit of work on this, in terms of price and fair value and trading customers fairly,” he said.
