Some of the factors the Financial Conduct Authority will consider if it launches a UK-wide consumer redress scheme as part of its review into car loans commission have been set out.
The regulator says it will confirm within six weeks of the outcome of the Supreme Court case, which is hoped to be announced in July, whether it does plan to introduce a redress scheme and it will then consult with industry on its detailed plans.
It has previously said it seems more likely than not that some redress will be necessary for car and van purchasers who unknowingly paid out inflated commission charges to dealers.
Factors the FCA must consider include whether the scheme would be ‘opt-out’, with customers who’ve had motor finance automatically included and the onus on finance providers to lead it, or ‘opt-in’ whereby consumers would have to confirm to their motor finance firm that they wish to be included.
The FCA hints that it realises the threat to the health of the car market from widespread significant payouts, something which even the UK Government has flagged as having the potential to cause “considerable economic harm”.
The regulator notes that any redress scheme must be fair to consumers who have lost out and ensure the integrity of the motor finance market so it works well for future consumers.
