10:22 am, March 15, 2024
Some car finance firms were very probably guilty of hiding commissions on loans to customers.
That’s according to the Financial Conduct Authority (FCA), which says it’ll be acting quickly to deal with any failings.
In 2021, the regulatory body banned the discretionary commission model that saw motor finance brokers and dealers create their own interest rates to unnecessarily raise customers’ finance costs.
At the beginning of this year, it launched a probe into it, ranging from April 2007 to January 2021, after the Financial Ombudsman Service upheld two cases.
Today’s Times quoted FCA chief executive Nikhil Rathi as saying it was ‘improbable we will find nothing to report as we look at historic motor finance sales’.
But Rathi told a City conference yesterday that the scandal was unlikely to be of the £50bn PPI proportions, which has been suggested within the industry.
Meanwhile, a tool set up by consumer champion Martin Lewis to help people find out if they may have been mis-sold motor finance received more than a million complaints within a month of launching.
It’s been estimated by brokers at investment bank Jefferies that the bill for the finance sector could be as high as £13bn.
As reported by Car Dealer, Black Horse owner Lloyds Banking Group has put aside £450m to deal with compensation claims, while banking group Close Brothers saw its shares tumble after it scrapped its dividend amid fears over its liabilities for historical motor finance commissions.
Rath was reported as promising the conference attendees ‘a more condensed time frame’ over handling any failings in motor finance.
‘Critically, this will depend on firms co-operating fully and providing data comprehensively and promptly, as well as potentially the speed of any court processes,’ he said. According to The Times, some claims are being fought in the courts by banks.
