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FCA lifeline for providers in car finance scandal: Watchdog extends deadline for firms to respond to complaints By CALUM MUIRHEAD Updated: 22:02, 13 November 2024 e-mail View comments Britain’s financial watchdog is set to extend the deadline for car finance providers to respond to complaints about commission payments in a scandal that has rocked the sector. The Court of Appeal ruled last month that commissions paid between banks and brokers on car deals may be unlawful as they were not clearly flagged to customers. It sent shockwaves through the market as it placed much higher levels of transparency requirements on lenders.
Shockwave: The Court of Appeal ruled last month that commissions paid between banks and brokers on car deals may be unlawful because they were not clearly flagged to the customer And it has drawn parallels with the scandal over mis-selling of payment protection insurance (PPI), which ended up costing banks £50billion. Estimates of the cost of the latest episode put it at £16billion though this look set to rise, Lenders including Lloyds have seen their shares hit as concerns mount. Firms such as Close Brothers, one of the UK’s oldest merchant banks, have suspended new car loans.
But yesterday the Financial Conduct Authority (FCA) said it was considering giving firms more time to assess complaints so they could be ‘efficiently and effectively handled’. ‘This would help prevent disorderly, inconsistent and inefficient outcomes for consumers making complaints, motor finance firms and the market,’ it said in a statement. RELATED ARTICLES Previous 1 Next Trump's election win is 'good news' for Britain's defence.
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.. Share this article Share HOW THIS IS MONEY CAN HELP How to choose the best (and cheapest) stocks and shares Isa and the right DIY investing account The FCA launched a review this year into whether motorists had been overcharged due to ‘discretionary commission arrangements’ used by the sector before they were banned in 2021.
These allowed dealerships and brokers to set the interest rate on deals, encouraging brokers to charge higher rates without regard to the loan’s size, length or customer credit scores. The FCA’s latest proposals, expected within the next fortnight, would, if implemented, give firms more time to reply to complaints. It said: ‘Motor finance firms are likely to receive a high volume of complaints in response to the Court of Appeal judgment.
’ The watchdog also said it would write to the Supreme Court to ask if the judgment could be appealed. It added any extension would cover at least the period up until a decision by the court on whether to grant the appeal. Close Brothers and FirstRand – both involved in the case – are already planning to appeal.
Should that be granted, the regulator said it wanted a quick decision ‘given the potential impact of any judgment on the market and the consumers who rely on it’. DIY INVESTING PLATFORMS AJ Bell AJ Bell Easy investing and ready-made portfolios Learn More Learn More Hargreaves Lansdown Hargreaves Lansdown Free fund dealing and investment ideas Learn More Learn More interactive investor interactive investor Flat-fee investing from £4.99 per month Learn More Learn More Saxo Saxo Get £200 back in trading fees Learn More Learn More Trading 212 Trading 212 Free dealing and no account fee Learn More Learn More Affiliate links: If you take out a product This is Money may earn a commission.
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