Risk it for a biscuit
19 March 2018
The Financial Conduct Authority (FCA) announced last week that it will continue its enquiry into motor finance, following the publication of a report detailing its first leg of the investigation which, for the most part, dubbed the majority of lenders safe enough.
Remaining concerns are to do with payment arrears and commission arrangements with retailers. Fair enough, we don’t want a repeat of the irresponsible lending that led to the financial crisis, and when borrowing has risen at such a rate, regulation should jog along in tandem. However, the FCA has had its peepers on automotive finance since May 2017 and, having dispatched with one relatively positive report, it’s back for yet another look.
Better to be thorough, but I can’t help but think that other forms of finance are perhaps being neglected in favour of a continued grilling of the automotive sector.
The glaring one is mobile phone contracts. According to Ofcom, there were 92 million mobile subscriptions in the UK at the end of 2016; that incorporates pre-paid cards, so probably overstates the number of pay-monthly contracts, and presumably incorporates tablets and similar devices. Either way, we can safely assume the true number is well into the millions.
Yes, mobile devices are cheaper than cars, but Ofcom also said the average cost of a 500-minute, 200 SMS and 5GB of data contract in 2016 was £40 per month – excluding the handset. Whack the latest iPhone on that, which launched at an eye-watering starting price of £999 last year, and you should be easily between £50 and £100 per month, if not higher.
Get yourself a Range Rover Sport on a PCP and you’ll be well north of that, but it’s far from impossible to find, say, a Kia Picanto, a Skoda Citigo or a Nissan Micra for around £100 a month, or maybe even less. And they generally sell in larger numbers.
Given the number, availability and commonplace nature of mobile contracts, you have to wonder why cars are getting all the heat.
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