Better news for motor finance customers

MOTOR finance customers could receive a payout, after the Financial Conduct Authority (FCA) announced yesterday that it will consult on an industry-wide compensation scheme.

- JORDAN REYNOLDS

Many motor finance firms were not complying with rules or the law by not providing customers with relevant information about commission paid by lenders to the car dealers who sold the loans, the FCA said.

The development comes after last Friday’s ruling by the Supreme Court on cases in which the FCA had intervened. While some motor finance customers will not gain 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, the FCA added.

The FCA estimates that most individuals will probably receive less than £950 in compensation. The final total cost of any compensation scheme is estimated to be between £9 billion and £18 billion, the FCA added.