The FCA has set out its expectations for firms making full and final settlement offers during the partial suspension of its motor finance redress scheme.
But there could still be disputes over settlements.
Commenting, Hyder Jumabhoy, Partner at global law firm White & Case LLP and Global Co-head of its Financial Institutions Industry Group and EMEA Co-head of its Financial Services M&A practice, said, “The FCA’s guidance on early settlement offers could help accelerate the resolution of the motor finance redress issue, giving lenders an opportunity to start drawing a line under outstanding claims. However, uncertainty around the final cost of compensation will remain until the legal challenges are resolved.
“Larger lenders are likely to be better placed to weather the financial impact, while smaller and mid-market firms could face greater pressure, potentially accelerating M&A activity across the sector. We may also see lenders reassess their exposure to motor finance, with strategic partnerships and acquisitions becoming more attractive as providers look to manage risk and build scale.
“Vehicle manufacturers and challenger banks will also be watching developments like this one closely, particularly for any opportunities created by changes in lending appetite.”
