FCA to act after Supreme Court ruling on car finance
Dealerships and car finance companies have avoided compensation payouts to motorists of up to £40bn after a Supreme Court ruling on commissions.
It ruled that hidden commissions from lenders to dealers on car loans were not unlawful, meaning millions of motorists will not be able to claim.
However, the Financial Conduct Authority is now considering a compensation scheme which could result in payouts of up to £950 per motor finance deal. The scheme is expected to apply to about 40% of drivers who bought cars on finance, with payouts expected to begin next year.
Nikhil Rathi, chief executive of the FCA, said: “It is clear that some firms have broken the law and our rules. It’s fair for their customers to be compensated. We also want to ensure that the market, relied on by millions each year, can continue to work well and consumers can get a fair deal.
“Our aim is a compensation scheme that’s fair and easy to participate in, so there’s no need to use a claims management company or law firm. If you do, it will cost you a significant chunk of any money you get.
“It will take time to establish a scheme but we hope to start getting people any money they are owed next year.”
