Thousands of motorists who bought cars in finance before 2021 could be set for payments, as the Financial Conduct Authority (FCA) said that it would consult a remuneration plan.
In a statement published on Sunday, the FCA said that its examination of the previous use of automotive financing “showed that many companies did not comply with the law or our disclosure rules in force when they sold loans to consumers.”
“When consumers have lost, they should be compensated appropriately, coherent and efficiently,” the statement said.
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The FCA said it estimated the cost of any regime, including remuneration and administrative costs, is not less than 9 billion pounds Sterling – adding that a total cost of 13.5 billion pounds sterling is “more plausible”.
We do not know how many people could be eligible for payment. The authority believes that most individuals will probably receive less than £ 950 compensation.
The consultation will be published by early October and any program will be finalized in time so that people start to receive compensation next year.
The announcement comes after The Supreme Court ruled On a separate, but similar case on Friday.
The court canceled a decision which would have noted that millions of motorists could have been due to compensation on the payments of the “Secret” commission made to the automobile concessionaires within the framework of the financing agreements.
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Automobile financing scandal explained
The case of the FCA concerns discretionary committee agreements (DCAS) – A prohibited practice in 2021.
Under these arrangements, brokers and dealers have increased the amount of interest they have gained without talking to buyers and received more commission for this. This would then have prompted the sellers to maximize interest rates.
In the light of the judgment of the Supreme Court, any remuneration system could also cover the non -discrital committee agreements, said the FCA. These provisions are those where the buyer’s interest rate has not had an impact on the concessionaire commission.
Indeed, part of the court decision “clearly indicates that the non-disclosure of other facts relating to the Commission can make the relationship (between a seller and the buyer) unfair,” he said.
It was previously estimated that around 40% of automotive financing transactions included DCA while 99% involved a commission payment on a broker.
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Nikhil Rathi, CEO of the FCA, said: “It is clear that some companies have violated the law and our rules. It is just that their customers are compensated.
“We also want to make sure that the market, invoked by millions of people each year, can continue to work well and that consumers can obtain a fair agreement.”