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The UK’s financial regulator has announced that motor finance companies must begin processing complaints two months sooner than initially scheduled, as it puts the finishing touches to a compensation programme for victims of the mis-selling scandal. The Financial Conduct Authority (FCA) will be removing a moratorium on handling certain motor finance complaints on May 31, instead of the July 31 deadline it had previously suggested.
Companies should already be examining complaints, but have not been required to respond to them since the FCA suspended the process in January 2024. This measure was designed to prevent chaos and inconsistency while it developed plans for an industry-wide compensation programme.
“It is likely that we will go ahead with a scheme and complaints that fall within it will be dealt with under specific rules, which will include timeframes for them to be dealt with,” the FCA stated in an update on Wednesday.
The proposed programme will compensate drivers who were unfairly sold a car loan between 2007 and 2024 because they were not properly informed about the commission paid to brokers, including car dealers.
The regulator’s proposals, which are anticipated to see around 14 million deals eligible for compensation, have faced considerable resistance from lenders. The scheme is currently under consultation and is anticipated to commence early next year.
The FCA stated that concluding its hiatus on managing complaints two months ahead of schedule provides firms with ample time to prepare their responses.
It anticipates that the bulk of complaints will be covered by its compensation scheme – but companies will also need to be prepared to address those that are not.
