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Fleet Alliance Group, the UK-based vehicle leasing and fleet management company, is calling for an education drive to help improve public understanding of car finance.

The call comes after the Financial Conduct Authority began consulting on plans to ban the way in which some car retailers and other brokers in the motor finance sector receive commission.

Currently, some motor finance brokers receive commission which is linked to the interest rate that customers pay. The broker can set that rate and the FCA found that the widespread use of this type of commission creates an incentive for brokers to act against customers’ interests.

Fleet Alliance managing director Martin Brown (pictured) said the investigation should help clear up some confusion in the marketplace, but more work is needed to help buyers understand the different products and suppliers in the market.

He said: “The FCA has been very clear that it wants to treat customers fairly and we welcome its clampdown on some unwelcome practises from certain car finance brokers.

“But I think we need greater differentiation between car finance brokers offering car deals based on Personal Contract Purchase (PCP) plans or other forms of car finance, and car leasing brokers offering rental hire, such as Personal Contract Hire (PCH), which this regulation is not aimed at.”

It is important that the car buyer understands the different products available, such as hire purchase or leasing, he added, saying: “The public is not helped by a national media that continues to happily mix up leasing rentals and personal contract purchase payments as if they are one and the same thing.

“Leasing brokers can only sell in a highly regulated way which includes assessing credit-worthiness and affordability before customers are presented to underwriting. Car leasing remains a highly consultative process, but at its heart it’s a product that is simple for the consumer to comprehend and is very straightforward.

“Greater clarification and understanding of the relative merits of both forms of funding would be highly welcome when the FCA reports in January.”

Fleet Alliance Group is one of the UK’s largest independent providers of leasing and fleet management solutions. Its brands include Intelligent Car Leasing, Intelligent Van Leasing, Neva Consultants and Neva Direct. The group manages more than 37,000 vehicles on behalf of corporate and personal clients with an asset value of more than £1 billion.