CAR finance borrowers should see cheaper deals from next year as motor dealers will be banned from setting pricey interest rates.Dealers will no longer be able to set the interest rate they charge car finance customers from JanuaryCurrently, car retailers and motor finance brokers receive commission, which is linked to the interest rate customers pay.
City watchdog, the Financial Conduct Authority , says banning this practice, known as "discretionary commission", will see customers save a collective £165million a year. Under today's measures, the FCA has also said motor finance and other types of credit broker will have to make it clearer to customers how they make commission.Christopher Woolard, the FCA’s interim chief executive, said: "By banning this type of commission, where brokers are rewarded for charging consumers higher rates, we will increase competition and protect consumers."