picture of a magnifying glass over the fca logo on the fca website

FCA already considering car finance redress scheme

The Financial Conduct Authority (FCA) has confirmed that it is considering a formal redress scheme to compensate potentially hundreds of thousands of people who may have paid hidden commissions in their car finance deals.

The FCA has already warned car finance lenders that they must ensure they can cover the costs of mis-selling complaints. A formal redress scheme would force companies guilty of mis-selling to compensate affected clients.

Speaking to parliament’s Treasury Committee on Wednesday, 8th May, the FCA’s CEO, Nikhil Rathi, said: “It’s [a redress scheme] one of the options based on the evidence that we receive.”

Rathi added that the regulator is continuing to scrutinise motor finance complaints and initial court rulings. The FCA is also asking firms for data on the scale of potential mis-selling. It has told firms to pause responses to car finance mis-selling claims until the end of September, when the regulator plans to announce the findings of its investigations and next steps.

Some car finance lenders, including Lloyds Bank, have already begun setting aside cash to cover compensation claims. At the same time, Barclays is challenging a ruling made against the bank, the outcome of which is being awaited by Lloyds, other car finance providers, and affected consumers.

Continuing, Rathi said: “I think it’s unlikely from our work that we’re going to find nothing to report, but I also would not want the committee to think that this is going to be on the same scale as PPI.”

The mention of PPI is an interesting one, as industry figures have previously said car finance mis-selling has the potential to be “the new PPI,” a label that the regulator has, to date, not dismissed or discouraged.

Learn more about the car mis-selling finance scandal.

What you can do if you’re worried your car finance was mis-sold

While the regulator has instructed all car finance mis-selling claims to remain on hold until September, it may well change course quickly and instruct lenders to restart responding to claims at any time before then.

If you’re worried that your car finance deal may have been mis-sold, it’s better to act sooner rather than later. If there ends up being a significant backlog of cases to deal with come September, it’s better to be nearer the front of the queue than at the back!

To make it easy to start your claim, you can take advantage of our free online check to see if you may be owed car finance mis-selling compensation.

Check your claim now.

Image Credit: IB Photography / Shutterstock.com

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