The Financial Conduct Authority (FCA) has announced plans to consult on an industry-wide compensation scheme for motor finance customers who were not provided with relevant information about commission paid by lenders to car dealers.
The FCA found that many motor finance firms had broken the law and failed to disclose commission arrangements, which could be considered unfair and unlawful. The UK’s highest court ruled that car dealers did not have a responsibility to act “altruistically” in customers’ interests.
CEO Nikhil Rathi stated that it is fair for customers to receive compensation and emphasized the importance of establishing a fair and easy-to-participate-in scheme. The FCA estimates that most individuals will receive less than £950 in compensation, with the total cost estimated at between £9 billion and £18 billion.
A consultation on the compensation scheme is set to launch by early October, with payments expected to begin in 2026 if the plan moves forward.
Source: https://www.standard.co.uk/news/uk/fca-nikhil-rathi-supreme-court-motor-b1241293.html