RICHMOND-based broker Kew Vehicle Leasing is taking the lead in customer transparency: it is now openly disclosing the amount of finance commission it receives on all regulated Personal Contract Hire (PCH) agreements.
It is the first broker to take this step.
In addition, Kew Vehicle Leasing says it will also disclose the lender as a matter of course.
Commission structures are the subject of FCA review in the car finance and dealer broker market, relating to the selling of consumer credit products and the amount of commission charged.
While the FCA has made it clear that rental agreements sold by leasing brokers are not affected, Kew Vehicle Leasing managing director, Lee Jones, says that by being open about commissions paid, the brokerage is putting further clear water between leasing brokers and car finance brokers.
He added:
“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? More to the point, I suspect customers will be surprised at the level of commissions, which are not in the thousands of pounds that customers assume. On average it is 1-2% of the vehicle P11D value.
“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.”
Jones added that the commission disclosure and vehicle funder will now appear on all orders, clearly stating the amount of commission being paid and the funding partner.
However, he said, customers were at liberty to ask about commission payments at any stage of the vehicle acquisition process.
“Treating customers fairly is at the heart of FCA regulation. 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.”
Ralph Morton is the leading journalist in the leasing broker sector and editor of Broker News, the website which provides information and news for BVRLA-registered leasing brokers. He also writes extensively on the fleet and leasing market in both the UK and Europe.
