AFC keynote address from the Consumer Redress Association

Asset Finance Connect’s (AFC) David Betteley will interview Simon Evans, CEO of Consumer Redress Association at the AFC UK Conference which takes place at etc.venues, County Hall in London on the 6th June 2024.

The interview comes at a time when claims management companies (CMCs) are encouraging consumers to make claims against auto finance companies after the Financial Conduct Authority (FCA) intervened earlier this year to protect the orderly functioning of the auto finance industry after a dramatic upturn in complaints resulting from their banning of discretionary commission arrangements (DCA) in 2021 and the subsequent upholding of claims relating to DCA contracts signed before the ban (when they were permitted) by the Financial Ombudsman Service (FOS). This matter is currently the subject of a judicial review brought by Barclays Bank.

• Learn how CMCs see their role as champions of consumers, increasing the value of compensation and successful complaints by more than 10%.
• Hear the CMC journey from rapid growth fuelled by PPI claims; the appointment of FCA to oversee CMCs in 2016; and the industry’s subsequent decline to less than 10% its former size.
• Consider Evan’s views in the context of a broader analysis by AFC of the effectiveness of regulators in driving good outcomes for consumers; in deterring bad lending practice and encouraging good.

Following the appointment of the FCA to oversee CMCs in 2016, the FCA set a deadline for new PPI claims. They needed to be made no later than 2019. This deadline resulted in high volumes of low-quality claims generated at the last moment to meet the deadline. In 2021 the FCA capped CMC commission to 10% of claims (itself prospectively a subject for judicial review); and in 2023 they proposed charging a £650 fee for CMCs in an attempt to weed out another explosion in spurious claims, this time for auto finance, which were the unintended consequence of their intervention.

Nikhil Rathi, chief executive of the Financial Conduct Authority, recently said “I do not anticipate [the historic review of DCA auto finance contracts] … playing out as PPI did, not least because we have intervened early in the interests of market orderliness.”

One solution under consideration following that early intervention, is to pay compensation to all consumers who have financed cars through these agreements regardless of harm. Evans notes claims are likely to be for around 2.3 contracts per auto finance customer – an unexpected consequence for the industry of getting repeat business.

The AFC UK Conference Summer 2024 will take place at etc.venues, County Hall in London on the 6th June 2024. It will include a keynote interview with Martin McTague, CEO of Federation of Small Businesses (FSB) who will tell lenders why he made a super-complaint to the FCA about personal guarantees requested by lenders from directors of SMEs seeking finance. We will also be releasing information about a major series of roundtable discussions between asset finance lenders and brokers which will take place on the day.

Visit the AFC UK Conference Summer 2024 website at https://afcconferenceuk.com/assetfinanceconnect2024/en/page/home for more details and to book your tickets at the early bird rate.

 

 

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