PARLIAMENTARY WRITTEN QUESTION
Cars: Loans (10 October 2017)

To ask Mr Chancellor of the Exchequer, whether he has plans to bring forward proposals for regulations to protect the motor industry from the effect of outstanding personal contract payment deals in the event of a depreciation in vehicle values.

Asked by:
Darren Jones (Labour)

The Government works closely with the UK automotive industry to understand the issues and opportunities the sector faces. The Government will continue its longstanding programme of support for the sector’s competitiveness.

The Government has fundamentally reformed regulation of the consumer credit market, transferring regulatory responsibility from the Office of Fair Trading (OFT) to the Financial Conduct Authority (FCA) on 1 April 2014. This more robust regulatory system is helping to deliver the Government’s vision for a well-functioning and sustainable consumer credit market which can meet consumers’ needs.

Car finance companies which offer personal contract purchase products are required to meet the standards that the FCA expects of lenders, including making affordability checks and providing adequate pre-contractual explanations to consumers. FCA rules are binding, and the FCA has a wide enforcement toolkit to take action wherever these rules are breached.

The FCA is committed to tackling sources of consumer detriment, and is looking at the car finance market to ensure that it works well and to assess whether consumers are at risk of harm. The FCA is carrying out supervisory work with lenders, and is carefully scrutinising firms’ sales practices and processes, to decide what further interventions may be necessary. This work includes assessing how well firms are managing the risk that asset valuations could fall, and how they ensure that they adequately price risk. The FCA will publish an update on this work in Q1 2018.

Answered by:
Steve Barclay (Conservative)
17 October 2017