The Financial Conduct Authority (FCA) has issued 38 final notices to dealers in the first half of this year.

It will mean those dealers will have their consumer credit permissions cancelled. The notices have been posted on the FCA's website.

In only the past six weeks, there has been at least one case per week, accounting for eight motor dealers losing their permissions to offer finance to customers.

Paul Speakman, Automotive Compliance director, said: “With all the FCA activity and ongoing consultations in the consumer credit market, it is common knowledge that the regulator is carrying out research into a number of areas of motor finance and dealers need to be mindful and review their current processes to understand if they have of any shortfalls.”

The FCA gave the following reasons for the removal of the motor dealers:

  • Failure to satisfy the suitable threshold conditions
  • Not being open and co-operative with the FCA
  • Failed to comply with Principle 11 – ‘Relations with regulators’; “A firm must deal with its regulators in an open and cooperative way and must disclose to the FCA appropriately anything relating to the firm of which that regulator would reasonably expect notice”
  • Lead the FCA to conclude the firm has failed to manage its business in such a way as to ensure that its affairs were conducted in a sound and prudent manner, that it is not a fit and proper person.

Speakman said it was becoming clear that some dealers have been treating credit authorisation applications in the same way as under The Office of Fair Trading (OFT), which was is a completely different regime to the FCA.

He said: “On the surface, it may appear to be relatively easy to submit an application for authorisation particularly for limited permissions, which covers the motor dealers credit broking activities.

“However, that is just the start, motor dealers need to have clear documentation and processes around Treating Customers Fairly, complaints procedures and financial promotions for their website and social media activity.”