It wasn’t so long ago that Martin Wheatley famously stated he intended to "shoot first and ask questions later", as he took up the reins at the then new regulator, the Financial Conduct Authority (FCA). Thankfully for motor finance, his sights were apparently aimed at the banking sector, and the controversial payday lender industry. Given the hundreds of millions of pounds the banks have had to pay over the past two years or so, and the much tighter regulation which has been imposed on the payday sector, it seems likely that many in those industries won’t be sad to see the back of him. Which would not necessarily be something he would see as an insult.
Motor finance, in comparison, has come through the Wheatley years comparatively unscathed. Despite many sleepless nights for brokers, lenders, dealers and everyone else, so far the FCA may have increased the regulatory burden, but is yet to take any real action against the industry.
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The key words there are ‘so far’. With Wheatley soon to be gone and his permanent successor still unknown, the regulatory world has taken a step back in terms of predictability, which is not a good thing. Since his resignation, it has come out that Chancellor George Osborne had revealed he was not going to renew Wheatley’s contract at the FCA, which has only lent credence to the rumours he jumped before he was pushed.
As no replacement has so far been mentioned, all we can do is speculate at the moment. Tracey McDermott, who is currently director of supervision – investment, wholesale and specialists at the FCA, will take over as acting chief executive from September, but this has been billed as a temporary position while a permanent replacement is found. Given Osborne recently said he wanted to move on from the era of ‘banker bashing’, however, it seems likely whoever eventually replaces Wheatley will be more in the "ask questions first, shoot later" mould. Whether this results in a meaningful change in the FCA’s direction or not time will tell.
While a successor is still being decided, the FCA still has a lot on its place which will have a very real impact on the motor finance industry. Arguably the two most important of these are on the now well-trodden topics of affordability and remuneration. Speaking to the industry, it seems that the vast major¬ity of players are by now fairly well versed on the issue of affordability, and are happy to share their views. The potential hiccup comes in the form of a planned consultation on creditworthiness, which may or may not change the situation.
Remuneration is a slightly more thorny issue to talk about, but hopefully the situation will become clearer over the second half of 2015, with remuneration codes among the FCA’s ‘key priorities’ for the 2015/16 period.
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By GlobalDataIt’s also perhaps disappointing that Wheatley’s announcement came soon after we held our confidence survey for the second half of the year. In it, ‘regulation and taxation’ was ranked as the top potential challenge for the year. Whether the chief executive leaving would have changed that (or indeed increased its lead in the polls) would be interesting to find out.
In our survey, just over 40% of respondents said they thought the FCA’s impact on the industry was either positive or highly positive, while just over 30% said it had been either negative or highly negative. So while Wheatley may have said he felt like he was leaving the role with a sense of unfinished business, it’s clear he has already made a big impact on the industry, albeit a divisive one.
For now, all we can do is wish him well for whatever the future holds for him, and wait with baited breath to find out who the permanent successor at the FCA will be.
