7:58 am, November 12, 2024
BMW has put aside more than £70m to compensate customers who may have been affected by the ongoing motor finance scandal.
BMW Financial Services (GB) Limited, the British car loans division of the German brand, says it has allocated a hefty £70.3m, following ‘a number of complaints in respect of historical motor finance commission arrangements’.
The announcement was included in accounts published via Companies House at the end of September, but have come to light now, following an investigation by The Times.
The newspaper’s study has found that the £70.3m put to one side by BMW takes the total amount set aside by lenders to almost £680m.
The vast majority of that consists of £450m which Lloyds Banking Group – owner of Black Horse – has allocated to the scandal.
It is believed that BMW’s commitment makes it the first car manufacturer to reveal exactly how much it is putting aside to deal with the controversy.
In its accounts, BMW Financial Services (GB) Limited said that it was ‘engaging with the FCA’ to support the review into now banned ‘discretionary commission arrangements’.
However, it insisted that it acted in compliance with regulatory requirements in the ‘vast majority’ of cases.
It said: ‘The Company has received a number of complaints in respect of historical motor finance commission arrangements, some of which are with the Financial Ombudsman Service.
‘On January 1, 2024 the FCA announced a review of historic commission claims. The company is engaging with the FCA to support the review of this mater.
‘Due to the ongoing review the company cannot indicate the expected time flows.
‘Within the calculation of provisions, the company includes the cost of making redress payments, related administration costs, and costs associated with litigation activity to date.
‘The provision is calculated using a weighting of multiple different scenarios. These scenarios include both the company undertaking a reactive customer redress scheme and one where the company’s view (that in the vast majority of cases it was compliant with the regulatory requirements in place at the time) is supported by the FCA review and/or subsequent industry or company-specific follow up.
‘There remains considerable uncertainty as to the potential outcomes, which could be materially different to the amount provided.’
The accounts were published before the Court of Appeal’s landmark ruling, which sparked chaos in the motor finance industry on October 15.
BMW declined to comment beyond what was included in the documents.
