Motor finance redress scheme imminent, says NFDA
The National Franchised Dealers Association is urging retailers to prepare for the launch of the motor finance redress scheme.
The Financial Conduct Authority will introduce the scheme in the coming weeks which will outline how compensation should be paid to motorists who were missold car finance between April 2007 and November 2024.
It is estimated that nearly 80% of car buyers were not told their dealers could earn commission from the sale, with the Financial Conduct Authority expecting 85% of eligible customers seeking compensation through the scheme.
This could result in payouts of around £8.2bn.
The NFDA is now encouraging dealerships to:
- Review and organise historic finance and transaction records
- Identify gaps in older documentation
- Review resources required to handle information requests
- Review commission structures and disclosures
- Prepare staff and customer communications.
Operational impact
Chief executive Sue Robinson said: “As discussions continue around potential lender redress schemes, we are encouraging retailers to begin preparing now for the possible operational and customer impacts on their businesses.
“While further clarity is still awaited, early preparation will be important to ensure retailers can respond efficiently and maintain customer confidence should any scheme be introduced. Reviewing historic records, assessing operational capacity, and preparing staff and customer communications will all be key.”
She continued: “The NFDA continues to engage with the Financial Conduct Authority and the Financial Ombudsman Service as matters progress, and we will provide further updates as more information becomes available. We are also liaising closely with lenders to understand their intended approach to any potential redress schemes.
“Members are strongly encouraged to seek support where needed to ensure they are well positioned ahead of any announcement.”
