Any future motor finance compensation scheme for consumers in Britain would be substantially smaller than the payment protection insurance (PPI) redress scheme that cost banks tens of billions of pounds
On Friday the Supreme Court overturned a landmark ruling on car finance commissions which eased fears among banks about the cost of an industry-wide redress scheme , though lenders will still likely face claims
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.’
The announcement follows Friday’s landmark ruling by the Supreme Court, on cases in which the FCA had intervened. While some motor finance customers won’t get compensation because in many cases commission payments were legal, the Court ruled that in certain circumstances the failure to properly disclose commission arrangements could be unfair and therefore unlawful.
