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The FCA investigation into the motor finance industry caused a decline in enquiries earlier in the year, a top lender has revealed.
Octane Finance boss Dan Horner has been appearing on the latest episode of the Car Dealer Podcast, sponsored by Carwow, where he discussed the impact of the investigation.
The story exploded in the early months of 2024, when consumer champion Martin Lewis hosted a special show about the crisis.
ITV aired a special one hour episode of the Martin Lewis Money Showin which the host said the ongoing investigation was likely to end up being ‘the UK’s second biggest reclaim ever, after PPI’.
Since then, his special car finance complaint tool has received more than a million enquiries, sparking fears that the industry could be facing a bill running into the billions.
Horner says that following the show being broadcast, his outfit experienced a slump in enquiries.
However, he believes the investigation could end up being good news for the finance industry overall and insists that Octane is not caught up in the current inquiry.
He told Podcast hosts James Baggott and Jon Reay: ‘I think it had an impact back in February this year, when a certain individual [Lewis] went live on TV and told everyone about it. We did see a drop off. We did notice a little bit of a dip within our business.
‘I’m a big believer in all publicity is good publicity and it brought finance to the forefront again. Thankfully hasn’t impacted us or affected us in any way because it was the old difference in charges model which we’ve never ran or never been with.
‘When Octane set up, every lender that we dealt with had an APR based model. It was either rate for risk or it was fixed rate. So there was no upselling or upscaling into trying to increase commission for anybody’
The FCA investigation centres around cases of finance houses not paying out compensation to customers over now-banned ‘discretionary commission arrangements’.
The watchdog is using its powers under S166 of the Financial Services and Markets Act 2000 to identify cases of potential wrongdoing by motor finance firms.
Lloyds Banking Group is said to have put aside £450m to deal with the fallout but Horner says that the customers are not concerned by commission figures.
He told the podcast that even following Lewis’s show, Octane has never had a single customer ask about commissions paid to dealers or lenders.
He added: ‘Throughout Octane, even since February, when it was all shown on national TV, we have still not had anyone query, question or ask [about commissions].
‘Now, as a broker, we’re not initially seeing that customer so obviously, it’s the dealer’s responsibility to ensure that the customer is given an initial disclosure document to highlight and identify that that dealer does receive a commission.
‘But in doing so, we are an intermediary. We are obviously sitting between the dealer, the lender and the customer. We do still advise the customer that we receive a commission and no one has ever questioned it.’
The Car Dealer Podcast, sponsored by Carwow, sees an industry guest join our hosts to discuss the motor trade’s biggest headlines of every week.
A full list of the stories discussed on this week’s episode can be found here.
You can listen to all episodes of the Car Dealer Podcast on Spotifyor wherever you get your podcasts.