– FCA probes sale or return dealers
– Focus widens after failures
– Firms warned to respond
– FCA probes sale or return dealers
– Focus widens after failures
– Firms warned to respond
The Financial Conduct Authority (FCA) has begun writing to dealerships advertising sale or return services, requesting evidence of risk controls, consumer transparency and senior level oversight.
The move signals increased regulatory scrutiny of the sale or return model, as the FCA broadens its focus beyond motor finance commission redress as part of its broader push to strengthen consumer protection across the automotive retail sector.
According to automotive specialist law firm Lawgistics, the regulator has contacted firms directly, asking them to demonstrate how they manage operational and financial risk, communicate clearly with consumers and ensure appropriate governance structures are in place.
FCA targets SOR practices
The intervention follows a number of high profile failures in the motor trade, where businesses operating sale or return models have collapsed, reportedly leaving some customers without vehicles or payment.
John McDougall, legal advisor at Lawgistics, said: “It is never nice to see any business fail. However, it appears that a number of customers have been left without cars or money in these scenarios, which raises concerns for the FCA.”
“These high-profile cases have clearly piqued the interest of the FCA, and it has now started writing to firms to ascertain whether there is an issue in this space.”
Dealers advertising sale or return on their websites are considered particularly likely to receive enquiries regardless of the scale of activity and are required to provide detailed responses if contacted.
Compliance response required
Firms receiving letters must also respond within a specified timeframe, with advisers warning that failure to engage is not an option for FCA-regulated businesses.
The regulator is understood to be focusing on three core areas: risk management processes, consumer understanding and communication and internal policies, procedures and oversight.
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