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Millions of drivers could soon benefit from a compensation scheme as a looming car finance scandal deadline approaches.
The Financial Conduct Authority has provided a major update on the future of the controversial car finance scandal and whether millions of drivers could receive compensation.
It stems from the FCA banning the practice of discretionary commission arrangements (DCA), which saw lenders allow dealers to adjust interest rates on financing deals to get a higher commission.
This practice was banned in 2021, although many drivers have complained that companies failed to tell motorists about the commission arrangements before the ban, with Britons losing out.
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Drivers could soon be part of a car finance compensation scheme
GETTY/PA
The case reached the Supreme Court, which heard the case in April, with a judgement expected to be given in July.
The regulator stated that it would confirm within six weeks of the Supreme Court judgement whether a redress scheme would be proposed, and if there would be a consultation.
The original decision found that several car finance schemes were unlawful. If this verdict is upheld, millions of drivers could receive compensation.
Under an FCA redress scheme, the regulator would set rules for how firms can assess claims and calculate the level of compensation given out.
READ MORE: Martin Lewis offers hope for drivers ahead of Supreme Court’s car finance scandal decision
Martin Lewis said he expected the Supreme Court to deliver a verdict in July
PA
In its latest update, it clarified that if a redress scheme is to be introduced, it will make the process simple, without needing to use a claims management company (CMC) or law firm.
It warned that drivers who sign up with a CMC or law firm may lose up to 30 per cent of their award, as they do not need the service.
Any redress scheme must meet the terms of legal tests, including that there has been a “widespread or regular failure to comply with requirements”.
This could include consumers who have suffered loss or damage for which a court would grant a remedy, or the FCA finds it “desirable” to introduce a redress scheme.
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