Car finance victims could receive less than £950 per deal under a proposed compensation scheme from the Financial Conduct Authority (FCA). The first payouts are expected next year.
The Supreme Court recently ruled that hidden commissions on car loans were not unlawful. However, this decision left room for compensation claims related to particularly high commissions that were deemed unfair.
The FCA plans to consult on running a payout scheme estimated to cost between £9bn and £18bn. Industry sources suggest that millions of motorists may be eligible for the scheme. The industry will cover all costs associated with the scheme, including administrative expenses.
Existing complainants do not need to take further action, but those who have yet to report their issues should contact their car loan provider directly. The FCA aims to inform firms about potential eligibility and what actions customers must take.
The Finance & Leasing Association has expressed concerns about creating a fair redress scheme that dates back to 2007 when records were not kept by lenders.
A consultation on compensation will begin in October, with the FCA aiming to cover agreements since 2007. The regulator expects a “healthy finance market for new and used cars” despite any proposed redress scheme.
Source: https://www.bbc.com/news/articles/cgjy29zql25o