Consultancy Compliancy Services (CS) has estimated that a combination initial outlays and year-to-year compliancy costs will mean the Financial Conduct Authority (FCA) could have cost consumer finance firms, including those in the motor finance industry, as much as £100m (€126.5m) by 2020.

In order to reach the figure, CS multiplied the overall cost of compliance for the consumer credit sector, as predicted by Europe Economics in October 2013, by the approximate percentage of the consumer credit sector made by firms which sold consumer finance goods or service, which in March 2013 was estimated to be 23% by the Financial Services Authority (now the FCA).

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According to Europe Economics, the initial cost of compliance to consumer credit will be between £92m and £167m, with an additional £35m to £60m a year in on-going compliance costs.

CS found that initial costs could be as high as £38.4m, and that on-going compliance would be between £8m and £13.8m, therefore potentially breaking the £100m mark by 2020.

Ben Mason, chief executive at CS said: "We’ve been advising firms that offer consumer finance on the authorisation process ever since the FCA assumed oversight of the sector in April. Yet, far too many firms are still way behind in understanding how to apply for FCA authorisation and what they need to do to be compliant. They simply cannot afford to underestimate the time and resource they need to put into this. It’s not optional either; if they don’t do this in time, there’s a risk that the FCA could take enforcement action against them"

"Firms face two very separate challenges: first to become FCA authorised, then to maintain on-going compliance, both of which are time-consuming processes. Many firms’ sole focus appears to be on getting authorised by the FCA, but they have failed to realise that they should have implemented compliant policies and procedures from 1st April 2014."

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