By Elizabeth Howcroft
LONDON (Reuters) – UK digital bank Zopa says it welcomes regulatory scrutiny on Britain’s motor finance industry but does not expect its business to be affected unless the scope of the watchdog’s review is broadened.
WHY IT’S IMPORTANT
Britain’s Financial Conduct Authority (FCA) said in January it would start investigating possible misconduct in the motor finance industry.
Banks are waiting to find out how big the FCA’s investigation will be – and how costly.
CONTEXT
Zopa – a lender which was awarded a banking licence in 2020 – had “very small volumes” in its motor finance business from 2017 to 2020, then expanded it after that, CEO Jaidev Janardana told Reuters.
KEY QUOTES
“Unless the scope of the investigation goes beyond what they have said in 2021, we won’t see any impact. Even if it were to, our volumes were so small then that it makes no material difference.”
“(Our auditors) said they saw no reason why they would allow us to hold a provision, or even a contingent liability, or anything like that.”
“In an ideal world, I think the review enables customers to make an active choice between multiple providers at the dealership. If that were to happen, then I think customers should get far cheaper car loans than they get today.”
WHAT’S NEXT
Last week the regulator told lenders to make sure they are ready to meet any potential costs arising from the probe.
(Reporting by Elizabeth Howcroft, editing by Sinead Cruise and Rosalba O’Brien)
