With the British population having voted to leave the EU on 23rd, the motor finance industry experts have warned the market to expect some short term instability, but that the longer terms impact won’t be known for some time.
The Financial Conduct Authority (FCA) warned that the vote will have significant implications for the UK.
Much financial regulation currently applicable in the UK derives from EU legislation, and this will remain applicable until any changes are made.
It said firms must continue to abide by their obligations under UK law, including those derived from EU law and continue with implementation plans for legislation that is still to come into effect.
It added: "The longer term impacts of the decision to leave the EU on the overall regulatory framework for the UK will depend, in part, on the relationship that the UK seeks with the EU in the future. We will work closely with the Government as it confirms the arrangements for the UK’s future relationship with the EU."
The Finance & Leasing Association (FLA) also suggested that it will be some time before the full consequences of the vote are known. Stephen Sklaroff, director general of the FLA, said: "We are at the beginning of what will be a long process of discussion and negotiation. As the Bank of England and FCA have already emphasised, the current legal and financial regulatory framework for FLA members remains exactly as it was before the vote, and it is likely to do so for some considerable time.
"The UK has a strong and resilient financial sector and the FLA’s members will continue to make a vital contribution to the economy. The FLA will work closely with the Government, regulators and other stakeholders to ensure that its members’ interests are properly reflected in discussions over the coming months and years about the possible market and regulatory consequences of the decision to leave the EU."
Before the referendum, member of The Society of Motor Manufacturers and Traders (SMMT) conducted a survey which found 77% of its members thought a remain vote would be best for their business.
In the immediate fallout of the ‘Leave’ vote, Mike Hawes, SMMT chief executive, said: "The British public has chosen a new future out of Europe. Government must now maintain economic stability and secure a deal with the EU which safeguards UK automotive interests. This includes securing tariff-free access to European and other global markets, ensuring we can recruit talent from the EU and the rest of the world and making the UK the most competitive place in Europe for automotive investment."
A number of companies have warned that the referendum result in the short term at least could result in instability and uncertainty in the market.
For example, Rupert Pontin, director of Valuations at Glass’s said: "This is an interesting result that sees the UK very much embark on a new chapter that is largely unwritten. If the Brexit voters are correct in their thinking, it could create greater prosperity for the country in the long term but, over the next few months and years, the road is likely to be very bumpy. Markets will be affected, as will the value of the pound, and we expect to see consumer confidence tail off until the view of the way forward becomes clearer. How long this will take is difficult to predict. "
When looking at the potential impact on the UK market specifically, Pontin said: "All of these developments are very likely to have negative effects including a period of instability for new and used car sales, as well as an increase in pre-reg activity and downward pressure on values. There is also likely to be further political instability as a result of the referendum outcome, both at home with the ruling government and across Europe as the EU comes to terms with the decision, which will create further uncertainty. Whatever the outcome in the longer term, there are plenty of challenges now facing the motor industry and the UK as a whole."
Meanwhile The AA, warned that there are many unanswered questions that will take months or years to resolve. In the short term, it suggested that the immediate fall in the pound will result in fuel prices increasing.
Grant Thornton has suggested there will be three broad phases of reaction to Brexit: initial volatility, medium term uncertainty and instability, and finally a longer term transition period.
The impact of this will be different for different organisation, Grant Thornton warned. It advised companies: "In looking at the threats and opportunities these create for your business, and planning how you can create and protect value, you may wish to consider the short, medium and long term implications for issues like people and talent, strategic ambitions, financing, risk, operations and protecting investment."
The National Association of Commercial Finance Brokers (NACFB) agreed that immediate uncertainty. Paul Goodman, chairman of the NACFB, said: ""In the wake of the Leave result, and the resignation of David Cameron, the UK is facing a period of considerable uncertainty, and small and medium-sized businesses will not be immune.
"Nobody knows how the result of the EU Referendum will play out, and its ultimate impact on the economy, but choppy waters in the short-term are almost guaranteed.
"The political events of the past 24 hours have the potential to shape the UK business landscape for many years to come. It’s just impossible to know whether it will be for better or for worse.
"What we shouldn’t forget is that the economy is robust and employment levels high.
"Managed correctly, the result of the referendum does not have to trigger a replay of the Global Financial Crisis. Bank of England Governor, Mark Carney, made a statement to this effect shortly after the Prime Minister’s resignation.