Compensation payouts on around 14 million unfair motor finance deals could start next year, at an average of about £700 each, the Financial Conduct Authority (FCA) has said.
The regulator previously suggested motorists could receive less than £950 per deal, but it now suggests they could receive less compensation than previously estimated.
Motor finance firms broke the law or its rules by not properly informing customers about commission paid by lenders to the car dealers that sold them the loan, the regulator said. As up to 90 per cent of new cars purchased in the UK are bought using motor finance, it’s estimated that millions could potentially be due payouts following the ruling from the Supreme Court.
Nikhil Rathi, the FCA’s chief executive, 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.”
The FCA boss saiid that not everyone would get what they wanted following the ruling, with a wide range of views on the compensation scheme and its timeframe.
“We recognise that there will be a wide range of views on the scheme, its scope, timeframe and how compensation is calculated,” she said. “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.”
This is a breaking news story, more to follow…
