Victims of car finance mis-selling might only receive around £950 each from a new compensation scheme proposed by the Financial Conduct Authority (FCA). The first payouts are expected next year.
Recently, the Supreme Court decided that hidden commissions from lenders to car dealerships are not illegal. This ruling means many drivers won’t be able to make claims. However, there is still a chance for compensation if the commissions were notably high.
In response, the FCA plans to consult on a compensation scheme, which could cost between £9 billion and £18 billion. They acknowledged that it is tricky to estimate the total costs, but millions of drivers may be affected. The automotive industry is expected to bear these costs, including any administrative expenses.
If you’ve already filed a complaint, you don’t need to take further action. For those who haven’t yet complained, the FCA suggests contacting your car loan provider rather than going through a claims management company. The FCA also plans to make sure customers know they could be eligible for compensation and what steps to take. Claims can be made for agreements dating back to 2007.
In October, the FCA will begin consultations to determine eligibility for compensation and the amount each person might receive. The Supreme Court ruling provided clarity on what is considered unfair.
This ruling overturned previous decisions that deemed hidden commissions unlawful. It particularly favored Marcus Johnson, who was awarded because his dealer’s commission was 55% of the total loan amount, indicating an unfair relationship with the lender, FirstRand.
The FCA highlighted that this judgment is beneficial as it provides a clear definition of unfair practices, which had previously been interpreted in various ways by different courts.
As user reactions unfold, many people are discussing this issue online, expressing frustration over the potential payouts and the implications of the ruling.
This situation offers a glimpse into wider issues in the finance industry. A recent survey indicated that 30% of people feel uncertain about their financial rights, showcasing the need for clearer communication and transparency.
For more details on this topic, you can read about it in more depth at BBC.
