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Upcoming changes in the way credit is regulated could add an unwanted layer of complexity to the way cars are purchased by smaller businesses.
From 1 April 2014, the Financial Conduct Authority takes over the regulation of the Consumer Credit Act from the Office of Fair Trading.
While most of the regulation will not directly impact car buyers, there is a potential that retail car buyers - and small fleets that behave like retail customers - will be asked for detailed financial information to check that they can afford the finance.
David Roper, regional head of financial services at PricewaterhouseCoopers, said: "There is an increasing focus by the FCA on the affordability of loans taken out by individuals; experience from elsewhere in the lending industry has been that the introduction of more rigorous requirements to demonstrate affordability at the point of sale of a loan can significantly increase the intrusiveness and length of the sales process.
"This could have a significant impact on the customer experience of buying a car as well as impacting sales productivity."
Paul Harrison, head of motor finance at the Finance and Leasing Association, said that given the FCA's objectives to protect consumers and promote effective competition on their behalf, a consumer-focused regulatory regime supported by a stricter supervisory and enforcement programme can be expected.
"Small businesses will continue to be captured by the Consumer Credit Act's current definition of 'consumer' as the vast majority of the CCA's provisions have been transferred to the FCA's draft rulebook," said Harrison.
Fleets should find out the extent of the regulation early in 2014.
Harrsion said: "We expect the FCA's final rulebook to be published in February, ahead of the new regulator taking on responsibility for consumer credit from 1 April 2014."
The FLA is also advising small fleets that select a retail route to source their cars to check the credentials of their dealer or credit broker.
"From 1 April 2014, small business customers should ensure that the dealer or credit broker they are discussing their finance needs with hold an Interim Permission with the FCA.
"This temporary permission from the FCA is valid until 1 April 2016, at which point the dealer/broker will need to be either directly authorised with the FCA or be an Appointed Representative of an authorised firm, should they wish to continue to engage in consumer credit activities," said Harrison.
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