Welcome to the Auxillias Motor Finance Hub!

The Auxillias Motor Finance Hub

Our clients and peer firms in the motor finance market have faced an unprecedented period of regulatory activity, scrutiny and change over the past 5 years – just look at the timeline set out below. This has included substantive shifts in the rules and law around commissions, meaning significant changes in the way the market operates, overlaid with other changes such as Consumer Duty.

We were set up in 2020 to specifically serve the motor finance market and are already nationally recognised as a leading firm in our sector. We’ve worked with and continue to support our clients through this unprecedented period of challenge and change.

We’ve also shared our thoughts regularly with our network, including through our regular Helping Hands forums as well as our publications. We have worked tirelessly to keep our clients updated of developments and we’ve now released this hub which consolidates all our resources and knowledge sharing in one place.

Read on below to see what we’ve done for clients in this area, how we can help, our discretionary commission arrangements timeline and our helpful information section.

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Schedule a free initial virtual consultation with our team by filling out this form to tell us what you would like support on.

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Work Auxillias has done so far for clients on current motor finance regulatory initiatives and issues

Advice on commission disclosure, capturing consent to commissions and re-structuring customer journeys in response to Johnson v FirstRand.

Reviews of lending documentation and pre-contractual information for compliance with Consumer Duty and to take account of emerging risks.
Commercial contracts working with firms to enhance and improve their contracts with distributors, including co-manufacturing.
Training for brokers and distributors, and lenders across a range of key topics, including SM&CR and vulnerable customers.
Financial Promotions reviews to ensure compliance and reflect updated status disclosures.
Strategic advice for boards and leadership teams, including on Consumer Duty and s.166 work in the motor finance market.
Framework development and implementation working with lenders and brokers to support them with a variety of compliance frameworks, including intermediary oversight
Specialist advice on innovative business models and fee / remuneration arrangements and associated monitoring and MI.
Audits and independent reviews to assess risks and identify areas of control weakness
Supporting with applications and notifications to the FCA.
Assisting with the conduct of individual claims, including coordinating the instruction of specialist counsel where required.

How Auxillias can help your business

With the recent changes - directly relevant to motor finance providers, motor finance credit brokers and dealers - firms are now more than ever needing to ensure that they are adapting to the new requirements.

Auxillias has experienced resource available to support you along the way. We regularly provide ongoing and direct guidance to lenders, brokers and dealers through a number of situations including:

Complaints handling
S166 notifications
Back book reviews and redress
Remediation support
DSAR requests

Our clients are also able take advantage of our value added services (click on the following headings to find out more):

By partnering with IAA-Advisory, Auxillias now has a network of wider industry board advisors to provide businesses with clear advice and independent insight to help them grow. All board advisory consultants are highly experienced, senior individuals in the industry who are well versed in helping businesses navigate the complexities of strategy and the dynamics of industry change. More here
Designed to deliver immediate impact and peace of mind. Our network of expert advisors and consultants stands ready to seamlessly integrate with your team, providing tailored solutions whenever and wherever you need them. Pay only for what you use, instant access to skilled talent, often at short notice, flexible solutions for temporary skills gaps, eliminating long-term commitments. More here
Provides a cost effective arrangement to support you with day-to-day legal, regulatory and compliance advice for a fixed monthly or annual retainer fee, with no commitment to a long-term contract. Consistent high quality additional consumer credit, compliance or legal expertise support, whenever you need it, and without delay. More here
Our programme of training for lending and leasing firms is designed to give staff at all levels of the organisation the knowledge they need to operate successfully and compliantly. Our materials are focused on practical learning and use real examples to illustrate the learning objectives. The modular approach allows firms to tailor learning paths for employees in specific roles. From the boardroom to collections to marketing, our solutions will help each member of the team understand what the regulator expects of them and how to deliver good customer outcomes. More here
This is our forum designed to enable individuals in the industry to come together and discuss pressing legal, regulatory and compliance matters. Participants can expect to hear insightful updates from the Auxillias team and invited expert guests, as well work in peer groups to develop understanding. Part of Helping Hands is about bringing together a community and enabling people to meet regularly. You can find our events here
We are specialists in financial regulation also supporting clients when dealing with the Regulator. We offer a variety of services ranging from, but not limited to: complaints handling, s166 notifications, back book reviews and redressand remediation support. More here

Discretionary Commission Arrangements - Timeline

2017 - 2018

During this period the FCA carried out a review of motor finance sector in response to increasing numbers of complaints about discretionary commission arrangements with motor finance firms.

January 2021

Following the review the FCA made the decision to ban discretionary commission arrangements to eliminate incentives for dealers to charge higher interest rates. The FCA made changes to the CONC rules requiring the disclosure of the nature of commission. There was no suggestion of redress at the time.

March 2021

A major Court of Appeal decision came from the Wood & Pengelly – which made it much more probable that borrowers could receive compensation, if the commission paid by the lender to their broker was not fully disclosed to them. The ruling confirmed that, in a case where a fully secret commission was paid by a lender to a broker, there is no need for a stringent fiduciary duty in order for the court to render the loan unenforceable.

Case law development throughout 2022 to 2024

There have been other court cases since the Wood & Pengelly ruling, each case tackling the issues around the discretionary commission arrangements and commission disclosure and fiduciary duty, such as:

Johnson v Firstrand Bank
Angel & Others v Black Horse Ltd
Canada Square v Potter
Wrench v Firstrand Bank Ltd
Hurst v BMW Financial Services

January 2024

The FCA announced that it will exercise its powers under s.166 of the Financial Services and Markets Act 2000 to launch "skilled person review(s)" into historical motor finance discretionary commission arrangements and sales involving DCAs across a number of firms.

PS24/1 issued by the FCA in line with this, and more recently PS24/2 - strengthening protections for borrowers in financial difficulty: Consumer credit.

The FCA carried out a webinar - temporary changes to handling rules for motor finance complaints to help answer some of the questions that have arisen due to the announcement of the s.166.

January 2024

The FCA wrote to the FLA and the NFDA confirming its view that where motor finance dealers and brokers determine an APR, they will be co-manufacturing under Consumer Duty

April 2024

Barclays initiated a Judicial Review of FOS’s decision. Awaiting outcome.

FCA sends out Dear CEO letter to lenders - maintaining adequate financial resources.

June 2024

FCA continues to collect data by sending out letters to lenders, dealers and brokers (those not served with s.166) asking the question: Did you have a DCA in place, if not what commission arrangements were in place?

July 2024 onwards

Await outcome of some court of appeal cases.

September 2024

We await the FCA’s update following its diagnostic review under s.166. FCA looking to come to view as to whether consumers are owed redress, and if they are, what the redress pathway should be for them.

Possible outcomes could be:

potential new rules ie DISP or supervision of firms
redress scheme such as:
- an industry-led redress scheme
- a s.404 consumer redress scheme under the Financial Services & Markets Act 2000 – covers where there is a widespread on irregularity
- schemes of arrangement or similar arrangements under the Companies Act ie under Parts 26 - where businesses can enter into a compromise or an arrangement; or
- Part 26A - looking at the situation the firm has encountered, or is likely to encounter, financial difficulties that are affecting, or will or may affect, its ability to carry on business as a going concern.
Decision likely to come once FOS makes final decisions (and subject to the judicial review) or any binding court decision. There is the possibility of moving to full commission disclosure.

October 2024

The Court of Appeal has handed down its decision in three combined appeal cases: Johnson v Firstrand Bank Ltd; Wrench v Firstrand Bank Ltd; and Hopcraft v Close Brothers Limited.

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Your team

Auxillias is recognised as a specialist legal and compliance law firm focused on supporting the motor and asset finance market. The team includes senior compliance and risk professionals and consultants with decades of knowledge and consists of subject matter experts with a unique blend of legal, governance, regulatory, compliance and risk skillsets, all with significant in-house experience which allows us to view matters from our clients’ perspectives.

Jo Davis - legal

Jo, a qualified lawyer with a track record at Partner level in UK legal firms, works across a wide spectrum ranging from consumer credit advisory and transactional matters, through to financial services regulation and compliance to include compliance with the FCA handbook and Consumer Credit sourcebook implementation. Jo provides legal counsel and compliance and regulatory advice to her clients and has been ranked by Chambers as one of the leading lawyers in the UK in consumer finance for the last 13 years.
Daksha Mistry – remediation, consultancy, complaints handling support

Daksha has worked within the banking and financial services sector for over 20 years, working for a number of major law firms in the UK, and also as an in-house solicitor at GE Capital. For seven years she was also involved in supporting businesses and leading major projects as an in-house consultant at a number of large banks. Daksha has supported lenders, brokers and dealers in putting together appropriate responses to complaints on commission disclosures from consumers, the Financial Ombudsman, law firms and claim management companies. She provides regular industry news on developments in court cases, plus advice and direction to clients on the validity of commission arrangements. She has also supported banks in-house and clients on remediation and redress projects.
Simon Brown – processes and procedures; complaints handling

Simon will oversee the compliance support that you require and will work closely with you to deliver compliance solutions. Simon has established a significant track record in delivering compliance solutions to motor finance firms over the last 20 years. He has extensive experience in working with firms to design, develop and enhance their compliance frameworks and dealing with remediation projects. Simon is an expert in the FCA’s conduct rules for Consumer Credit as well as the methodology of running a successful compliance programme. He has direct experience working on regulatory engagements, FCA reviews ands166 reports.as well as developing and maintaining effective relationships with the regulator on behalf of his clients.
Paul Godsmark – governance and risk

Paul will support you with your governance and risk requirements. He has over a decade of experience working with regulated firms, both in private practice at WalkerMorris LLP as well as in-house at CLS and Hitachi Capital. With broad experience of advising on legal, regulatory, compliance and operational risk matters, Paul specialises in consumer finance, consumer law, marketing and advertising, data privacy and managing significant regulatory change.
Frank Brown – s166 specialist

Frank is a governance, risk and regulatory expert with extensive experience of advising boards and senior management on how to achieve their strategic objectives while staying within risk appetite and abiding by the rules and principles of the regulators. He has also acted as an s166 Skilled Person and is well versed in dealing with regulators. When advising firms, Frank encourages clients to take a holistic view and recognise that risk crystallisation, regulatory breaches and failures to effectively execute strategy can be symptoms of root cause issues in the firm’s governance, culture, organisational structure and business model.