Car finance mis-selling payout scheme could cost billions, says FCA
Briefly

The Supreme Court ruled that lenders are not liable for hidden commission payments in car finance schemes, affecting compensatory payouts for mis-sold loans. The financial regulator suggested that the compensation scheme could cost up to 18 billion, a decrease from the previous estimate of 45 billion if the court had upheld the original decision. Thus, only the most serious claims will be eligible for compensation, as the bulk of claims will not proceed. The final costs of the scheme will depend on its design, making precise estimation challenging.
A compensation scheme to pay out drivers who were mis-sold car loans could cost as much as 18 billion, the financial regulator has said. Millions of drivers were denied payouts after the Supreme Court ruled on Friday (1 August) that lenders are not liable for hidden commission payments in car finance schemes.
Two lenders, FirstRand Bank and Close Brothers, challenged a Court of Appeal ruling that the secret commission payments paid to car dealers as part of finance arrangements made before 2021 - without the motorist's fully informed consent - were unlawful.
After the Supreme Court's decision, the bulk of the claims will therefore not go ahead, with only the most serious claims eligible for compensation. The 18bn figure is a significant drop from the 45bn if the Supreme Court upheld the ruling in full.
The FCA thinks it unlikely the cost of the scheme, including its final design, would be precisely estimated.
Read at www.independent.co.uk
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