Keeping the motor finance market stable, FCA insists on the continuation of its redress scheme.
Revised Article:
Motor Finance Redress Scheme/
The Financial Conduct Authority (FCA) is weighing up whether to implement a redress scheme for the motor finance market, ensuring it keeps the industry afloat.
The watchdog insists maintaining the market's integrity is vital so future consumers can benefit from a healthy market. The Supreme Court is set to rule on whether banks illegally paid commissions to car dealers in the summer.
Post-verdict, the FCA will announce within six weeks if it's planning to introduce a redress scheme. However, the FCA is firm – the scheme mustn't drive businesses under or force any exit from the market, which could lead to less competition, escalating costs for consumers interested in car loans.
Should firms cease operations, consumers might miss out on compensation if motor finance isn't covered by the Financial Ombudsman.
CMC Cautions for Consumers
Analysts at RBC predict total provisions for the motor finance scandal could exceed £30bn.
Before, the Treasury had taken an interest in the case, worrying about the potential chaos it could cause to the banking sector.
Lloyds Banking Group holds the steepest provisions at £1.2bn, followed by Santander with £295m and Close Brothers with £165m.
The FCA aims to make the scheme relatively simple for consumers to grasp, dispensing with the need for claims management companies (CMCs) or law firms.
A word of caution from the FCA - consumers who link up with CMCs or lawyers could find themselves obliged to pay for an unwanted service and potentially up to 30% in fees for any award they receive.
- The Financial Conduct Authority (FCA) is considering the implementation of a redress scheme for the motor finance industry to maintain the market's integrity and foster a healthy market for future consumers.
- The FCA is conscious that the redress scheme should not lead to the collapse of businesses or less competition in the banking-and-insurance sector, potentially causing escalating costs for consumers.
- Analysts at RBC predict total provisions for the motor finance scandal could exceed £30bn, raising concerns within the general-news sector about the potential impact on the banking sector.
- To avoid potential fees of up to 30% for any award received, the FCA advises consumers against engaging with claims management companies (CMCs) or law firms, as they aim to make the redress scheme relatively simple for consumers to navigate on their own.
