Financial Conduct Authority (FCA) action on the mis-selling of car finance should not be read across to commission related to other areas of general insurance including protection, the regulator has emphasised.
FCA CEO Nikhil Rathi (pictured) also told Health & Protection that an update to the regulator’s pure protection market study was coming “in the next couple of months”.
Earlier this week the FCA revealed plans for compensation for millions of victims of car finance mis-selling related to commission payments between lenders and dealers, unfair contracts, and inaccurate information given to car buyers.
Pay-outs could result from 14 million motor finance agreements between April 2007 and November 2024 with an estimated value of £8.2bn.
During the long-running legal case then-Association of Mortgage Intermediaries (AMI) chief executive Robert Sinclair warned the issue could treaten commission arrangements throughout the financial services sector.
The regulator has also been taking significant interest in commission arrangements within its ongoing pure protection market study.
Should not be read across
However, responding to a question raised by Health & Protection at its Annual Public Meeting about whether the FCA wants to take a tighter grip on commissions in the insurance sector earlier today, Rathi was unmoved.
“We have been really clear on this,” Rathi said.
“What we said about motor finance should not be read across to any other retail financial services market.”
Rathi added the reason is because the regulator’s proposals on motor finance have been based on an analysis of data from tens of millions of agreements and is bespoke to motor finance.
“We have done some separate work on motor insurance which we published in July and we’ve got a separate market study going on in pure protection where we will say some more in the next couple of months as well,” he concluded.
