As the motor finance sector waits for clarity from the FCA on the final scope of its redress scheme, firms can’t afford to sit still. In this concluding part of our webinar, the panel outlines the recommended next steps for motor finance firms – from data mining and disclosure reviews to early procurement moves.
We also explore the potential ripple effects across the wider consumer credit market and whether claims management companies (CMCs) could push the FCA’s hand to expand the scope.
Garry Evans, Chief Product Officer and Chief Commercial Officer for TCC Group
Fab. Thanks Mike. In, on the back of that then, if I can, I hand back to Gary. In terms of what motor finance creditors need to do now, what is the kind of TCC recommended approach and timings from here?
Gary Maude- Director of Advisory Services for TCC Group
So just before I get on to that. Overriding factor, I would give people, especially those on the call who I think were involved in big past business reviews in the past is to really challenge where you’re starting from, hope for the best, plan for the worst. Verify the integrity of your data. And, if the FCA goes back to 2007, I think many of us will start to question the integrity or even existence of information going back that far.
I was going to go on and just talk about what you’re looking for, which is, cases which involve discretionary commission, cases with high commission levels, determining disclosure practices of firm’s distribution, how the disclosure was commissioned, e.g. did they simply disclose it existed versus what might be received? We don’t know what the relevance of that is going to be going forward. Whether they need to disclose quantum to get past that particular hurdle.
I would be looking to data mine as far back as you can, get some general sense of comfort and then start getting into tranches or buckets, as we say in Yorkshire, of how comfortable you are with your data, taking into account any distribution arrangements with motor dealers, whether they were consistent with the scope of service they set out to the consumer and indeed to you.
I think someone just raised the question about vulnerability. Will CMCs start manipulating, the customers to make them sound like they are vulnerable? Well, they may do, but to go back to where we started from earlier, the FCA, consultation should hopefully take into account considerations of vulnerability. Whether or not some of those claims were vexatious versus sophisticated all the bits in between. So they’re possibly no doubt they will try if they are allowed to even get involved.
There are a number of things you should be getting on with now. But, overall data mine as much as you possibly can. And just see what you think you’re starting with and go from there.
Garry Evans, Chief Product Officer and Chief Commercial Officer for TCC Group
Thanks Gary. I guess if I look to summarise kind of where we got to, I think the remediation and redress environment is muddier and more complicated than we thought it was going to be. And I think as a result of that, there’s an awful lot of information that’s up in the air and clarity is not going to be known for a while yet. However, that isn’t a reason not to do anything. As has been called out, there is going to be a resource challenge, for these projects. And if there’s a real resource challenge, then the people who get out there first with an RFP, say, with the ones who get those resources.
Getting yourself prepared is going to be really key, in order to be, kind of finishing this process quickly and effectively. And data is going to be a core part of that, understanding your populations, getting the data for everything from your relationships with your, kind of dealers and, and dealerships and brokers and right away through to what information do you hold on customers going back all the way to 2007, which is going to be a challenge.
If you can get that and your policies and your processes set up effectively, you’re going to be in the best possible place in order to take this forward. That’s about all we wanted to cover here today. We have got a couple of questions, that I think we can go to now. Gary talked a bit about the vulnerable customers piece. Mike, have you anything to add on the vulnerable customers piece with the CMC’s?
Mike Morris- Head Of Operations at Momenta
I suppose just to add to what Gary has said in terms of whether they would pivot, we are already seeing it in terms of some of our existing clients where, complaints around affordability and responsible lending are being, sort of buried within the DCA complaint. And that is outside of the pause, so that is an activity, again, if firms have got complaints sitting waiting, it’d be a good exercise to start triaging those and looking at those. So the CMC’s have already pivoted. And we’re seeing it with some of our clients.
Garry Evans, Chief Product Officer and Chief Commercial Officer for TCC Group
Fab, thanks Mike. We have another question, and it might be a little bit harsh to throw this out at you guys. It’s quite a difficult one. But, a question on the wider implications in relation to payment of commissions. Do we have a view on how far reaching this could be, to whom and to the impact? And I suppose for me this is more about, you know, originally when we were going through the Supreme Court ruling, there was talk about, this isn’t limited to motor finance if it’s none DCA, but actually the kind of the whole consumer credit space is, is up for grabs.
Given what they’ve stated, what do you think the potential implications are for kind of broadening this out to other parts of financial services and how incentivised and motivated do you think the FCA are of actually doing that?
Gary Maude- Director of Advisory Services for TCC Group
From memory I have, intentional avoiding of that question, because it could come up in the jury of courts.
Garry Evans, Chief Product Officer and Chief Commercial Officer for TCC Group
I tell you what we’ll do. We will collate Gary’s answer and we will put that back in an email afterwards. Mike, did you have a view on any of that?
Mike Morris- Head Of Operations at Momenta
To default to, to Gary’s opinion in terms of the wider range of impacts of that. So I think it’s best if, if Gary collates his response, that’d be great.
Garry Evans, Chief Product Officer and Chief Commercial Officer for TCC Group
I mean my I’m and whilst it’s not a desperately educated one, my personal opinion is that the FCA aren’t, particularly motivated to do this at the moment. The government put quite a lot of pressure on the FCA to, to limit things down. And so there’s no they’re not looking for opportunities to take this further. I think what would be interesting is whether the CMCs find that angle. And if the CMCs find an angle to go after, but I think that would kind of push the, the FCA one way or the other.
I think that draws us to a close today. Between us, TCC, Momenta and Recordsure have the capability to help with any of your needs regarding this coming remediation program from advice through to technology and the specialist resource and outsourced managed services. If you do wish to continue this conversation, or if you’d like a free consultation hour to test your thinking and plans, please do reach out to me. And if not, then I wish you a very nice afternoon. Thank you very much.
Ready to see the full webinar – you can watch the full 30 minutes here.
The message is clear: uncertainty is no reason for inaction. Firms can start preparing now by verifying data integrity, segmenting historical cases, reviewing dealer arrangements and addressing vulnerable customer risks. This puts organisations in a better position to secure scarce resources and execute remediation quickly.
TCC, Recordsure and Momenta bring a unique blend of regulatory expertise, technology and specialist resourcing to help you plan, scale, and deliver. If you’d like to test your strategy or discuss how we can support your remediation programme, get in touch for a free consultation hour.
