Kew Vehicle Leasing is to openly disclose the amount of finance commission it receives on all regulated Personal Contract Hire (PCH) agreements.
The move is a bid to lead the industry with transparent processes as other finance sectors come under investigation from the Financial Conduct Authority (FCA) regarding the amount of commission paid to finance brokers and dealers.
Although Kew Vehicle Leasing is a leasing broker and not a car finance broker, its senior executives say it is a bold step that will set the company apart. It will also disclose the lender.
The FCA review relates to motor finance brokers and dealers who are selling consumer credit products, such as hire purchase and personal contract purchase; the FCA review does not apply to personal contract hire, sold by leasing brokers such as Kew Vehicle Leasing, which is a regulated rental agreement and not a purchase product.
Lee Jones (pictured), managing director of Kew Vehicle Leasing, said: “It’s a significant step for us to be first to disclose commissions. We are leading the way in the leasing broker market.
“If you look at the way Independent Financial Advisers work - disclosing the lender and the amount of commission payable on, say, a mortgage quotation - it is made quite clear the amount being paid for the service.
“I don’t see leasing brokers being any different - why shouldn’t we provide the same level of transparency?”
He said that customers might be surprised that the level of commission is much less than expected - typically 1-2% of the vehicle P11D value.
Jones added: “I hope that it will also demonstrate the remarkable value leasing brokers provide. We work with multiple manufacturers and dealer groups to ensure the best vehicle discount terms, service and lead times for customers, before managing the credit application on their behalf along with vehicle delivery and in-life support where required. It adds up to exceptional value for money.”
Kew Vehicle Leasing will put the commission disclosure and vehicle funder on all orders, but customers can ask for details at any stage of the vehicle acquisition process.
“Treating customers fairly is at the heart of FCA regulation,”Jones added. “We strive to do this at every stage of the process - and being the first leasing broker to disclose commission is another step towards assisting the customer in a fair and transparent manner.”
For more on the FCA’s position, read the FCA statement: FCA acts to protect those buying motor finance