Millions of motorists in the UK may be eligible for compensation next year due to issues related to the mis-selling of car loans, according to the Financial Conduct Authority (FCA). This compensation is linked to commission structures between lenders and dealerships, as well as inaccurate information provided to consumers, following a ruling by the Supreme Court.
The Supreme Court ruling has narrowed the scope of these cases, but it is estimated that up to 30 million car loan agreements made between 2007 and 2020 could be subject to review. The FCA has indicated that a finance redress scheme is in development, and it plans to launch an extensive awareness campaign to inform affected individuals about the compensation process, eligibility criteria, and how to make a claim.
During a testimony before MPs on the Treasury Committee, FCA Chief Executive Nikhil Rathi mentioned that details are still being finalized, including whether claimants will have to opt-in or will be included automatically in the scheme. He assured that the scheme aims to be pragmatic, fair, and proportionate.
It is anticipated that individuals could receive less than £950 per loan agreement. Eligible claimants are likely to include those involved in discretionary commission arrangements, where dealers received commission based on the interest rate charged to buyers; those with unfair contracts due to excessive commission; and individuals who did not receive accurate information regarding financing options.
Rathi also noted that some firms have not been cooperative as the FCA prepares the compensation scheme. When pressed by the Treasury Committee about which firms were resistant, he did not disclose specific names. This potential compensation initiative follows a previous scheme related to payment protection insurance (PPI), which resulted in significant payouts to consumers after they had been mis-sold policies.
Source: https://www.bbc.com/news/articles/c5y8xpxp3r6o?at_medium=RSS&at_campaign=rss