FCA proposes motor finance compensation scheme
About 14 million drivers can expect payouts of around £700 as a result of a motor finance compensation scheme proposed by the Financial Conduct Authority.
It estimates total the total compensation bill for unfair motor finance agreements to be £8.2bn.
Compensation is due after motor finance companies broke laws and regulations by failing to disclose important information. This led to unfairness, with consumers denied the chance to negotiate or find a better deal and, in some instances, paying more for their loan.
The FCA believes a compensation scheme is the best, most efficient way of getting compensation to those owed it and would make it simpler for those who would otherwise struggle to claim.”
Fair compensation
Nikhil Rathi, chief executive of the FCA, said: “Many motor finance lenders did not comply with the law or the rules. Now we have legal clarity, it’s time their customers get fair compensation. Our scheme aims to be simple for people to use and lenders to implement.
“We recognise that there will be a wide range of views on the scheme, its scope, timeframe and how compensation is calculated. On such a complex issue, not everyone will get everything they would like.
“But we want to work together on the best possible scheme and draw a line under this issue quickly. That certainty is vital, so a trusted motor finance market can continue to serve millions of families every year.”
The free-to-access scheme would cover motor finance agreements taken out between 6 April 2007 and 1 November 2024 where commission was payable by the lender to the broker. Drivers can submit their own complaint using a template letter (DOCX) on the FCA’s website.
