The UK motor finance sector has spent the past two years consumed by legal uncertainty, FCA scrutiny and mounting questions around commissions and customer outcomes.
But beneath the headlines, a broader industry reset could now be underway. According to new research presented by FTI Consulting at the Shoosmiths automotive conference, the future battleground for lenders, dealers and finance providers may no longer be compensation itself, but consumer trust.
That shift carries significant implications for dealerships. After years of increasingly complex PCP products, digital finance journeys and growing regulatory scrutiny, the industry now faces a more fundamental question: do consumers actually understand the products they are being sold and does transparency itself now offer a commercial advantage?
Trust becomes strategic
Opening the session, Wayne Gibbard, partner and co-sector lead at Shoosmiths, argued the industry needs to switch its focus from the mechanics of the FCA’s proposed redress scheme to the wider lessons emerging from the crisis.
“We wanted to take a step back and look at the impact sector-wide through a reputation lens,” he explains. “What does this mean for automotive finance going forward? What are the lessons we can learn and are there practical steps we can take to manage these reputational issues?”
Gibbard says the same themes repeatedly resurface throughout the research. “Transparency, simplicity and clarity for customers, coupled with transparency around pricing, are the best ways of stabilising and promoting a trusted brand,” he says.
Those themes became central to findings presented by Mitch Barltrop, senior managing director at FTI Consulting, whose team surveyed 2,000 UK consumers, many of whom use vehicle finance products. Despite the scale of scrutiny facing the sector, Barltrop says the research reveals a more resilient consumer picture than many lenders may expect.
“The fundamental utility of the product is very much here to stay,” he reports. “Despite the two-year public debate around fairness and harm, there still remains a universal consumer perception that motor finance is fundamentally useful for people in their lives.”
That distinction matters because, unlike previous financial mis-selling events, consumers still see automotive finance as an essential and valuable product rather than something fundamentally flawed.
But the research also uncovered growing fault lines around pricing transparency and consumer perception. “There is a blanket perception that product pricing and incentives lack transparency,” Barltrop says. “That perception is very much here whether it is true or not.”
The perception problem
One of the strongest themes emerging from the discussion was that the industry’s reputational challenge may no longer sit entirely within its own control. Barltrop warns that public debate around motor finance has increasingly been shaped externally through social media, claims management companies and wider media coverage, often ahead of definitive legal or regulatory decisions.
“What we have in the current dynamic is that the public debate has front-run the legal process,” he says.
The research suggests consumers often place greater trust in external voices than direct communication from finance providers themselves, creating a significant challenge for lenders and dealerships attempting to rebuild credibility.
“There’s a real lack of authority consumers give to direct provider communication,” Barltrop notes. “The question now is how firms disintermediate that noise and put transparency at the heart of their direct-to-consumer approach.”
That challenge is particularly relevant for dealerships, where finance conversations increasingly form a central part of the customer journey and where retailers often act as the visible face of the wider finance ecosystem.
Complexity versus clarity
For Gibbard, one of the underlying problems stems from the way finance documentation and customer communication has evolved over decades of regulatory layering.
He argues that many consumer credit systems remain anchored to outdated approaches built around compliance rather than customer understanding.
“There is comfort in history and certainty,” he says. “But the challenge now is not simply legal compliance. It is bringing clarity.”
The session highlighted a striking disconnect between the complexity of many finance agreements and the realities of consumer comprehension.
“The average reading age in the UK is around 11 years old,” Gibbard notes. “Most consumer credit agreements are written at degree level, and the maths involved is often post-degree level.”
That mismatch, he argues, creates friction, distrust and disengagement. The research also suggests many consumers view finance terms not as tools to educate them, but as documents designed primarily to protect lenders.
“The emotional reaction becomes: this is something being done to me rather than for me,” says Gibbard.
Transparency as opportunity
However, rather than framing simplification purely as a compliance obligation, both argue the industry may be underestimating its commercial potential.
Gibbard says testing carried out by the firms found customers were significantly more likely to engage positively with products when finance information was presented more clearly using simplified language, visual aids and improved formatting.
“There is manifestly a commercial driver behind this,” he says. “When terms were more clearly explained and signposted, customers accessed products with much less friction and much less interaction with the provider.”
The findings challenge long-held assumptions within parts of financial services that greater transparency risks discouraging customers from proceeding with finance products. Instead, the research suggests simplification may actually increase consumer confidence and improve conversion.
“For those firms that adopt principles of transparency and clarity, there will actually be a commercial edge,” insists Gibbard.
That creates a potentially important shift for dealerships and lenders alike.
Historically, finance sales often relied heavily on complexity, monthly payment framing and layered product structures. Under Consumer Duty and increasing public scrutiny, the industry now appears to be moving towards a model where simplicity itself becomes a competitive advantage.
The retailer reset
For retailers, the implications extend well beyond regulatory compliance. The industry’s shift towards EVs, digital retailing and agency-influenced sales models is already making finance conversations more complicated, not less. Customers are navigating unfamiliar technologies, changing ownership models and increasingly sophisticated finance products simultaneously.
That environment places growing pressure on dealers to transition from traditional sales intermediaries into trusted explainers and advisers.
During the Q&A, questions from delegates focused heavily on how dealers could rehabilitate themselves as trusted intermediaries following the commission controversy.
Gibbard argued the transformation is already beginning. “There has been an accelerated curve of professionalisation and change over the last five years,” he says. “Consumers are demanding change. They are becoming more inquisitive and asking more questions.”
He added that pressure for change will increasingly come not only from regulators, but from lenders and customers themselves. “We are really only at the foothills of the transformation that’s required,” he says.
For motor finance providers and dealerships alike, rebuilding trust may not depend on legal outcomes alone. The firms that emerge strongest from the current crisis could ultimately be those that make finance products easier to understand, easier to trust and allow the buyer to feel they have control.