Road to Zero report
Road to Zero report

THE FINANCIAL Conduct Authority (FCA) needs to ramp up its work in the motor finance sector, particularly around unfair commission models.

Responding to the FCA’s final report on motor finance, the BVRLA has urged the regulator to take a more active role in supervising lenders, retailers and brokers, stepping in with enforcement where required.

Chief executive Gerry Keaney said: “The FCA has been working on this report for two years and has issued plenty of guidance and recommendations during that period.

“Over the same period, the BVRLA and its members have taken a close look at our own industry guidance and best practice, supporting these with a comprehensive training and inspection programme.

“The time for excuses has passed. There is no place in the motor finance sector for companies that are unwilling to embrace the FCA regime and actively demonstrate their compliance.”

Launching its final report, the FCA highlighted a number of concerns, particularly the ‘Difference in Charges’ (DiC) broker commission model which gives brokers discretion to set the customer interest rate and thus earn higher commission.

“This is one area where we need some swift policy intervention to address a blatantly unfair practice,” added Keaney.

The regulator also reinforced the need for greater emphasis on affordability assessments and for lenders to take more responsibility in ensuring that brokers are complying with its Consumer Credit sourcebook (CONC).

Keaney said: “The BVRLA has more than 340 motor finance brokers in membership, who embrace our mandatory code of conduct and governance regime. We would like to see more lenders working with us to improve industry standards and processes.”

The BVRLA is also among future mobility stakeholders calling for a new policy on motoring taxation.

Nine organisations representing economists, fleets, motorists, the automotive industry, energy providers, and local government have contributed to a new BVRLA report: Road to Zero: time to shift gear on tax.

Together, they warn that the advent of increasingly connected, electric and shared road transport presents challenges and opportunities for future Government motoring tax policy.

They point to the impending decline in revenues from the current CO2 emissions-based regime and highlight the potential for a new tax system that could help tackle devolved transport priorities including urban air quality and congestion.

The report reveals consistent findings and attitudes among its contributors, including:

  • “No change” on vehicle tax isn’t an option: the consequences for drivers and the environment are too severe and the opportunities to seize are too great
  • New technologies present an opportunity to develop a fairer and more sophisticated tax system that could be based on distance travelled, time of journey, location or air pollution
  • Government taxes and incentives need to give fleets and motorists a clearer and more consistent long-term message that investing in plug-in electric vehicles will bring economic benefit
  • The Treasury needs to protect future motoring tax receipts as drivers move to electric vehicles and CO-based income declines – by up to £2bn per year
  • The UK’s increasingly devolved transport policy has given cities and regions greater powers to impose local motoring charges and taxes. Local policymakers need greater national government support in designing and implementing these schemes so that they are both fair and consistent
  • The way we are driving is changing – from ownership to shared use – and the tax system needs to keep up.

The BVRLA wants the report to stimulate a dynamic discussion between drivers, the automotive supply chain and policymakers about creating a tax system fit for the future.

BVRLA Chief Executive, Gerry Keaney, said: “Time to Shift Gear on Tax is the first report of its kind, bringing together a host of policy perspectives and ideas that all demonstrate the urgent need for vehicle tax reform.

Fuel duty, VED and Company Car Tax have been successful in driving down carbon emissions. Now it is time to go back to the drawing board and explore how the fiscal regime could also make roads safer, less congested and fit for the future.”

Building on the report, most of the contributors have also co-signed a letter to the Chancellor, calling on the government to commission an independent and wide-ranging review into the modernisation of the motoring tax system for a zero-emission future.

They also want a focus on delivering a fair, transparent and adaptable national motoring tax regime capable of funding the UK road network and driving behaviour change that reduces congestion and air pollution and to develop a national road-user charging policy that can support cities and regions if they choose to implement local motoring charging schemes.

 Keaney added: “We want the report to kick-start a process of change, with industry working with the Treasury. A taskforce with the kind of expertise shown in the report will help drive this forward.”

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