Important update: We're back open for business
Following the UK Court of Appeal judgment on Friday 25th October, we took the decision to pause new business from Monday 28th October while we worked to mitigate the legal implications to protect our dealers, brokers and customers.
We have now made the necessary adjustments to ensure the business can operate within the legal requirements set out in the judgment and are now open for new business in MotoNovo.
We do understand the pause to new business created challenges for you, and we thank you for your patience and support while we have been navigating the impact of the judgment. For more information, including clarification on the obligations of Credit Brokers see below.
What have we done since the pause in new business?
Our teams have been working diligently to be able to make the necessary adjustments to ensure the business can operate within the legal requirements set out in the judgment and we’re pleased to confirm that we plan to resume Motor and Asset Finance new business operations in a phased approach throughout Wednesday 6th November.
To recap, the Court of Appeal judgment confirmed the requirements for lenders:
- There must be full disclosure to the customer of the commission paid to the intermediary
- The disclosure is to be made in good time before the agreement is signed and should be very clear and prominent
- This applies to all transactions where the credit broker owes the customer a fiduciary duty
To ensure that we comply, we'll be implementing a commission disclosure consent form across Motor and Asset Finance lending which will be presented at pre-contract stage in the financing journey.
Why has the commission disclosure process changed?
On Friday 25 October, the UK Court of Appeal published a judgment on three cases relating to motor finance agreements. The Court of Appeal judgment confirmed the requirements for lenders. To make sure we comply, we’ve introduced a commission disclosure consent form which will be presented at pre-contract stage in the financing journey. This form will require explicit customer consent before they can proceed to signing and agreeing the contract.
Do the changes we have made mean we now comply with the Judgment and regulation?
We are confident that with the implementation of our new processes, we have taken the appropriate steps to adhere to the requirements of the judgment and avoid any breaches of the law.
Do the changes you have made mean you agree with the Friday 25 October UK Court of Appeal ruling?
FirstRand is concerned by the judgment and does not agree with its findings. FirstRand believes that the commission disclosures in both the Wrench and Johnson agreements were in accordance with all legal and regulatory requirements. Given the importance of this issue, FirstRand believes these matters should now be heard by the UK Supreme Court which only considers matters of law with wider public importance.
Dealer FAQs
What changes have you put in place?
All applications will go through a new disclosure journey. At the point of acceptance MotoNovo will issue a new Commission Disclosure Consent Form as part of our existing Pre-Contractual Documentation through our existing E-Sign journey. The customers will then be asked to provide their explicit consent to the payment of commission before they can proceed to signing an agreement.
What is the responsibility of MotoNovo and what the responsibility of dealers?
You have a continued obligation to comply with law and regulation under the Financial Conduct Authority’s Consumer Credit Sourcebook. Although MotoNovo Finance are providing a commission disclosure journey post-acceptance, they do not supersede your obligations to a customer pre-acceptance.
For commercial deals, do all Directors need to sign the commission disclosure form?
No - only one Director’s signature is required.
Will a customer need to sign a new commission consent form if a proposal is amended?
Yes, any amendments will result in new documents that will need to be signed by the customer as per current processes.
I submitted a proposal before 12.00 on 28.10.2024 and it hasn't been paid out, can I continue with this deal?
You will need to complete a new proposal. Any deal that was not approved before 12.00 on 28.10.2024 does not comply with our new requirements.
