Lookers, one of the largest car dealer groups in the UK, has said it is under investigation by the Financial Conduct Authority (FCA) for activities relating to its sales processes between 2016 and 2019.
The Lookers board said that it had uncovered ‘certain matters requiring review’ in its 2018 annual report and accounts, which it then commissioned an independent review of in December 2018 which was shared with the FCA.
This revealed that there were some control issues in the sales process in the Group’s regulated activities which required attention, said Lookers in a statement.
“We have invested in both our internal capabilities and external advice. The project will be completed and agreed actions will be implemented as soon as possible,” said Lookers.
As a result of its own review, Lookers was informed by the FCA that it intended to carry out an investigation into the Company’s sales processes between the period of 1 January 2016 to 13 June 2019.
The FCA investigation is newly commenced and no findings have been made, said Lookers.
“The FCA will reach its conclusions in due course and, at this stage, the Company cannot estimate what effect, if any, the outcome of this investigation may have. The Company is co-operating fully with the FCA in relation to this and will update the market further when appropriate,” the business said in its release.
In March, the FCA released its motor finance review.
In it, the Financial Conduct Authority (FCA) singled out commission models as a concern that could lead to market intervention, as part of its long-awaited report into the motor finance sector.
The FCA found that Increasing Difference In Charges (DiC) and Reducing DiC commission arrangements provided strong incentives for brokers to arrange finance at higher interest rates.
The FCA found that other commission structures provide a weaker link to the interest rate or none at all.
The FCA is now assessing the options for intervening in the market which would address the supposed harm it has identified. This could include strengthening existing FCA rules or other steps such as banning certain types of commission model or limiting broker discretion.