The Financial Conduct Authority (FCA) today issued a statement setting out some of the things it needs to consider if it were to introduce a redress scheme as part of its review into motor finance commission arrangements.
The Supreme Court has yet to make a judgement on the issue. In March, the FCA said that if, following the outcome of the Supreme Court judgment, it concluded motor finance consumers have lost out, it’s likely that it would consult on an industry-wide consumer redress scheme.
Under a redress scheme, it would set rules for how firms assess claims and calculate redress, and we would put checks in place to ensure they are following the rules.
The scheme would make it easy for consumers to understand and participate in, without needing to use a claims management company (CMC) or law firm.
The FCA said it was not possible to predict the outcome of the Supreme Court’s judgment, but it was engaging with stakeholders now because it wanted to act quickly once it had the judgement.
Given that it is already working on the case the usual consultation period could be shortened to as little as six weeks.
IT said any redress scheme must be fair to customers but also critically must ensure the integrity of the finance market for future customers.
Sue Robinson, chief executive of National Franchised Dealers Association (NFDA), said: “NFDA acknowledges today’s statement from the FCA regarding key considerations for a possible consumer redress scheme relating to historic motor finance commission arrangements.
“We are actively engaging with the FCA, including participation as a stakeholder in the Consumer Redress Scheme Design Panel, to ensure the views and interests of our members are clearly represented.
“NFDA will continue to monitor developments closely, as we await the upcoming Supreme Court decision, and keep members informed.”
“If many firms were to go out of business or withdraw from the market, this could reduce competition and could make it more expensive for consumers to borrow money to buy a car in the future.
“Where firms fail, customers may not get any redress, as motor finance isn’t covered by the Financial Services Compensation Scheme,” it said.