FCA extends motor finance compensation scheme consultation
The Financial Conduct Authority has extended the deadline for its consultation on its motor finance compensation scheme.
It proposed the scheme last month after it was found that motor finance companies broke laws and regulations by failing to disclose information to customers such as dealer commissions.
It believes about 14 million drivers can expect payouts of around £700, with the total cost to lenders and finance companies about £8.2bn.
However, after lenders questioned the calculations, the FCA has extended the consultation deadline until 12 December but says it still plans to publish results in February or March, with payouts beginning in the autumn.
The FCA said: “It’s important we receive as much evidence as possible on specific concerns through the consultation as well as alternative suggestions if respondents don’t agree with our proposals.”
Considered process
The decision has been welcomed by the Finance and Leasing Association.
CEO Shanika Amarasekara said: “The FCA’s decision to extend the consultation is a step in the right direction. This issue warrants a considered process, and while nine weeks is still short for such a complex and consequential proposal, it’s an improvement on the original six.
“Customers who rely on the largest point-of-sale market in the consumer credit sector deserve a considered process that leads to a robust redress scheme. A six-week consultation would not have delivered that, and a badly designed remedy risks creating new problems rather than resolving old ones.”
