The Financial Conduct Authority (FCA) has announced a significant update regarding car finance compensation for eligible recipients. Motor finance companies will now begin processing complaints ahead of schedule, starting May 31, 2024. This change comes two months earlier than the initial deadline of July 31, 2024.
New Compensation Scheme Timeline
Initially, the FCA had paused certain motor finance complaints in January 2024. This decision aimed to maintain order while developing a compensation plan for those impacted by mis-sold car loans. With the revised timeline, firms must begin investigating and responding to complaints sooner.
Details of the Mis-Selling Compensation Plan
The compensation scheme targets motorists who were misled about car loans from 2007 to 2024. Many consumers were not adequately informed about broker commissions, which contributed to the mis-selling issues. The FCA’s proposal intends to cover approximately 14 million transactions eligible for compensation.
Industry Response and Consultations
Despite the FCA’s plans, lenders have voiced considerable concerns about the implementation. Currently, the authority is soliciting feedback on the proposed scheme, which is expected to launch in early 2025.
Key Facts to Note
- Regulator: Financial Conduct Authority (FCA)
- Early Complaint Handling Start Date: May 31, 2024
- Initial Pause Date: January 2024
- Original Deadline for Complaints: July 31, 2024
- Period Affected: 2007 to 2024
- Eligible Transactions: Approximately 14 million
- Expected Launch of Scheme: Early 2025
The FCA aims to ensure a structured approach to addressing complaints, allowing firms to prepare adequately for the forthcoming compensation process. Consumers impacted by the mis-selling of car loans can expect clarity and resolution as the FCA moves forward with these initiatives.
