Kew Vehicle Leasing becomes first leasing broker to disclose finance commission
Kew Vehicle Leasing is taking the lead on openly disclosing the amount of finance commission it receives on all regulated Personal Contract Hire (PCH) agreements as it looks to provide a fair and transparent service.
It’s believed to be the first such move by a leasing broker and comes as the Financial Conduct Authority (FCA) consults on changes to car finance commission to ensure that buyers are not overcharged and that they receive more relevant information.
The new rules, which will come into play next year, will help target unfair practices on car finance broker commissions – where the amount paid is linked to the interest charged on the loan. Research by the watchdog has found that “some motor dealers are overcharging unsuspecting customers over a thousand pounds in interest charges in order to obtain bigger commission payouts for themselves”.
The regulation is only aimed at car finance brokers offering car deals based on Personal Contract Purchase (PCP) plans or other forms of car finance – not car leasing brokers offering rental hire, such as Personal Contract Hire (PCH).
However, Kew Vehicle Leasing says it’s taking the lead in the leasing sector because of an increased desire for openness in dealing with customers requesting personal lease deals.
The leasing provider added that its “bold step” will distance it further from those finance brokers subject to FCA scrutiny.
Lee Jones, managing director of Kew Vehicle Leasing, commented: “It’s a significant step for us to be first to disclose commissions. We are leading the way in the leasing broker market.
“If you look at the way Independent Financial Advisers work – disclosing the lender and the amount of commission payable on, say, a mortgage quotation – it is made quite clear the amount being paid for the service.
“I don’t see leasing brokers being any different – why shouldn’t we provide the same level of transparency?”
He added: “More to the point, I suspect customers will be surprised at the level of commissions, which are not in the thousands of pounds that customers assume. On average it is 1-2% of the vehicle P11D value.
“I hope that it will also demonstrate the remarkable value leasing brokers provide. We work with multiple manufacturers and dealer groups to ensure the best vehicle discount terms, service and lead times for customers, before managing the credit application on their behalf along with vehicle delivery and in-life support where required. It adds up to exceptional value for money.”
The commission disclosure and vehicle funder appears on all orders, clearly stating the amount of commission being paid and the funding partner. However, customers are able to ask about commission payments at any stage of the vehicle acquisition process.
“Treating customers fairly is at the heart of FCA regulation. We strive to do this at every stage of the process – and being the first leasing broker to disclose commission is another step towards assisting the customer in a fair and transparent manner,” Jones added.