The FCA is not coming to check your paperwork. It is coming to find out whether your customers actually understood what they signed.
Most dealer groups have a Consumer Duty policy. A substantial number cannot tell you, with any confidence, whether their salespeople are applying it on the floor.
The Duty has four outcomes, but one question your sales team cannot duck
Consumer Duty, codified under PRIN 2A of the FCA Handbook, is built around four consumer outcomes: products and services, price and value, consumer understanding, and consumer support. For a dealership, the third outcome is where most compliance failures happen.
Firms must act in good faith, avoid causing foreseeable harm, and enable customers to pursue their financial objectives. The third rule trips up sales floors more often than the other two combined.
Consider a salesperson who presents a finance package in the final ten minutes of a handover, with the paperwork already printed and the customer assuming the deal is done. Nobody lied. Nobody misled deliberately. The customer still had no real opportunity to make an informed decision, which is a foreseeable harm whether the salesperson intended it or not.
What the Supreme Court said, and why it matters more than you think
In Johnson v FirstRand Bank & Others [2025] UKSC 33, handed down August 2025, the Supreme Court upheld an unfair relationship finding under Section 140A of the Consumer Credit Act 1974. The finding rested on the size of the commission, the failure to disclose it, and what Lord Reed described as “the concealment of the commercial tie between the dealer and FirstRand.”
Brokers must disclose commission where it could affect their recommendation. The Supreme Court found that duty was breached in Johnson. The FCA built PS26/3, its motor finance consumer redress scheme finalised March 2026, directly on the foundation of that ruling — with £7.5 billion expected to be returned to consumers.
The lesson for dealer principals is not simply about past commission structures. It is about what your salespeople are disclosing today on finance packages, GAP, and any other product where their earnings are influenced by what the customer chooses. The legal implications of the Johnson decision extend well beyond the historic redress window. As UK Finance noted in its analysis of the ruling, the Supreme Court has materially reset expectations for how motor finance commission must be communicated at the point of sale.
The GAP sale is still your biggest compliance risk on the forecourt
GAP insurance remains the product most likely to generate a Consumer Duty failure on a typical dealer forecourt. The FCA's ICOBS framework governs how GAP is sold, and the Consumer Duty sits on top of it, requiring firms to demonstrate that customers received genuine value and understood what they were purchasing.
A customer presented with GAP insurance immediately after agreeing a finance deal, with a monthly premium bundled into the overall payment, has very little chance of making an independent assessment of whether the product suits them. If you cannot show a distinct conversation, separate from the finance discussion, where the customer had time to consider and genuinely consented, your Consumer Duty position is weak.
The FCA's published focus areas for 2026 include the structuring of customer journeys — specifically whether firms are using friction in ways that prevent informed decision-making. A bundled GAP sale at handover sits squarely in that category.
Outcomes monitoring is no longer optional
One area where the FCA has been explicit — in its portfolio correspondence to motor finance firms — is the expectation that firms can demonstrate, not just assert, that customers are receiving good outcomes. Management information covering complaint rates, product persistency, and customer support interactions is now a supervisory expectation.
Most dealer principals can tell me what their finance penetration rate is to the nearest percentage point. Very few can tell me what proportion of customers who took GAP insurance made a claim that was settled in full, or how long their average complaint response time looks.
If you cannot measure an outcome, you cannot manage it. More significantly, you cannot explain to the FCA's supervisory team how you know the outcome is good.
What “evidencing good outcomes” actually means on the sales floor
PRIN 2A.4, covering price and value, requires firms to assess whether their products deliver fair value to the consumers they serve. For a dealership, this means being able to articulate, with supporting data, why the finance products and add-ons you recommend represent genuine value for the specific customers you are recommending them to.
The FCA's consumer finance regulatory priorities make clear that a product approval memo signed off by a board that meets quarterly does not satisfy this requirement. What is expected is a live process where the people who conduct the sales conversations are trained, monitored, and periodically assessed.
Here is a scenario that plays out in dealer groups every week. A branch manager notices that one showroom has a GAP attach rate of 78 per cent across all demographics and all finance types. Without reviewing a sample of those sales calls, there is no way to know whether that figure reflects excellent customer service or systematic mis-selling. The Consumer Duty requires the manager to find out. This is exactly the kind of gap that FCA compliance monitoring for dealerships is designed to surface.
Consumer Duty compliance checklist: sales floor essentials
| Area | Good position | Risk position |
|---|---|---|
| Finance commission disclosure | Commission and lender relationships disclosed at point of recommendation | Commission mentioned only in T&Cs or omitted entirely |
| GAP sale timing | Presented as a separate conversation, distinct from the finance discussion | Bundled into monthly finance payment at handover |
| Customer understanding | Salesperson confirms understanding verbally; interaction recorded or noted | Customer signs without a verbal check on key terms |
| Outcomes monitoring | Branch manager reviews MI monthly including complaints, persistency and support contacts | MI limited to sales volumes and finance penetration rates |
| Vulnerable customers | Identification process in place with adjusted sales approach documented | No protocol for customers with additional needs |
| Staff training | Consumer Duty training refreshed post-PS26/3 with assessed role-play component | One-off online module completed at initial rollout in 2023 |
What dealer principals should do this week
- Pull a sample of ten recent finance and GAP sales from each showroom and check whether the call record or written notes evidence a disclosure conversation that would satisfy CONC 4.5.3R and PRIN 2A. If you cannot pull those records, that is itself a compliance finding.
- Ask your compliance officer or finance manager to confirm in writing what MI is currently reviewed at board or senior management level and how it evidences consumer outcomes. If the answer is “we track complaints”, that is not sufficient under the FCA's portfolio letter expectations.
- Review the timing sequence of your GAP presentation. If it is delivered in the same conversation as the finance package, separate it and give customers a defined window to consider the product independently before committing.
- Check that your staff Consumer Duty training has been refreshed since PS26/3 was finalised in March 2026. The regulatory landscape changed materially when that policy statement landed, and a training module written in 2023 does not cover it.
- If you run appointed representatives or satellite sites, treat their compliance position as your own. The FCA has been explicit in its portfolio correspondence that weak oversight of ARs constitutes a Consumer Duty failure at the principal level.
Tools like axleo are built specifically for UK dealerships to flag missing commission disclosures, GAP sale sequencing issues, and Consumer Duty risks on sales calls automatically, giving branch managers a dashboard rather than a pile of recordings to work through. See how axleo automates compliance monitoring across your dealership. Whether you use software or manual review, the obligation to evidence good outcomes sits with you and cannot be delegated to a policy document.
The FCA is not checking whether you have a Consumer Duty framework. It is checking whether your customers are actually experiencing good outcomes. If your answer to that question relies on the fact that nobody has complained yet, you are not in a defensible position.