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UK watchdog plans to ban interest-linked commission for car dealers, brokers

The U.K. Financial Conduct Authority plans to ban car retailers and motor finance brokers from receiving commission linked to interest rates paid by customers.

The regulator noted that brokers set such rates, giving them the incentive to increase it and act against customers' interests.

The ban would give lenders more control over the prices customers pay and allow customers to save £165 million a year, according to the regulator.

"By banning this type of commission, we believe we will see increased competition in the market which will ultimately save customers money," said Christopher Woolard, the FCA's executive director of strategy and competition.

The FCA is consulting on the proposed measures until Jan. 15, 2020, and plans to publish final rules later in 2020.