JMLSG has published revisions to its sectoral guidance on Motor Finance. It has submitted the new guidance to Treasury for approval.
The additions to the existing guidance comprise of an FLA industry standard annex which sets out the approach required by full FLA members to due diligence when they are considering a credit application, and acceptable methods to conducting them.
The guidance considers:
- the need to keep up to date and appropriate risk assessments;
- the fundamental requirement to carry out CDD and when SDD or EDD will be appropriate;
- the basic requirements for what is required by way of identification and the way in which it should be verified through reliable and independent sources;
- the need to understand the ownership and control structure of business customers;
- when it is appropriate to use digital identity and digital/electronic verification, and how to address due diligence on a non-face-to-face basis;
- reliance on another party;
- best practice which goes beyond the standard – such as getting confirmation of the customer’s insurance, asking them to share their driving licence details, investigating source of funds and verifying the identity of the customer when delivering the vehicle; and
- suggestions on carrying out due diligence on brokers and suppliers.
The guidance also gives examples of what DD could be appropriate in certain cases, and how it should be obtained.