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| Car finance scandal branded 'an unholy mess' | |
| (2 months later) | |
| A saga over the sale of car finance is "one unholy mess" and customers can complain to their lender if they are aggrieved, MPs have heard. | A saga over the sale of car finance is "one unholy mess" and customers can complain to their lender if they are aggrieved, MPs have heard. |
| Lenders and dealers have been accused of hiding commission payments made when cars were bought on finance deals. | Lenders and dealers have been accused of hiding commission payments made when cars were bought on finance deals. |
| Facing the Commons Treasury Committee, bosses at the financial regulator were told the situation was a mess that would take a long time to resolve. | Facing the Commons Treasury Committee, bosses at the financial regulator were told the situation was a mess that would take a long time to resolve. |
| Dissatisfied car buyers should complain, if they felt their loan was mis-sold, the Financial Conduct Authority (FCA) said. Thousands of drivers have already done so. | Dissatisfied car buyers should complain, if they felt their loan was mis-sold, the Financial Conduct Authority (FCA) said. Thousands of drivers have already done so. |
| The vast majority of new cars, and many second-hand ones, are bought with finance agreements. | The vast majority of new cars, and many second-hand ones, are bought with finance agreements. |
| About two million are sold this way each year, with customers paying an initial deposit, then a monthly fee with interest for the vehicle. | About two million are sold this way each year, with customers paying an initial deposit, then a monthly fee with interest for the vehicle. |
| Advice to drivers | Advice to drivers |
| The FCA has been considering whether car buyers should be compensated for cases when car dealers received a commission from lenders, based on the interest rate charged to the customer. These arrangements were banned in 2021. | The FCA has been considering whether car buyers should be compensated for cases when car dealers received a commission from lenders, based on the interest rate charged to the customer. These arrangements were banned in 2021. |
| A recent Court of Appeal ruling widened the saga to other types of "hidden" commission payments and raised the possibility of millions of motorists receiving pay-outs. Banks have set aside hundreds of millions of pounds as a result. | A recent Court of Appeal ruling widened the saga to other types of "hidden" commission payments and raised the possibility of millions of motorists receiving pay-outs. Banks have set aside hundreds of millions of pounds as a result. |
| Dame Meg Hillier described the situation as "one unholy mess" because dealers and lenders may not have been transparent to their customers. | Dame Meg Hillier described the situation as "one unholy mess" because dealers and lenders may not have been transparent to their customers. |
| She asked what advice there was for anyone caught up in it. | She asked what advice there was for anyone caught up in it. |
| "If you are not satisfied with the terms of your finance agreement, you should contact your lender and put in a complaint to your lender if you are concerned," said FCA chief executive Nikhil Rathi. | "If you are not satisfied with the terms of your finance agreement, you should contact your lender and put in a complaint to your lender if you are concerned," said FCA chief executive Nikhil Rathi. |
| Hundreds of thousands of complaints are likely to have already been made, potentially ending with the largest compensation scheme regarding financial products since the payment protection insurance (PPI) saga. | Hundreds of thousands of complaints are likely to have already been made, potentially ending with the largest compensation scheme regarding financial products since the payment protection insurance (PPI) saga. |
| Lawyers for car buyers say cases should proceed on the basis of the Court of Appeal ruling, but Mr Rathi was more circumspect. | Lawyers for car buyers say cases should proceed on the basis of the Court of Appeal ruling, but Mr Rathi was more circumspect. |
| He said that the courts had given different interpretations of the law regarding fixed commissions, while the FCA had already been looking into discretionary commission arrangements. | He said that the courts had given different interpretations of the law regarding fixed commissions, while the FCA had already been looking into discretionary commission arrangements. |
| Lenders involved in the case have asked the Supreme Court to consider the case. In the meantime, dealers and lenders have been given a longer period to deal with complaints. | Lenders involved in the case have asked the Supreme Court to consider the case. In the meantime, dealers and lenders have been given a longer period to deal with complaints. |
| A clearer idea on whether a "structured redress system" which would either require customers to complain, or ensure firms go back through cases and automatically pay compensation, would come next year, MPs heard. | A clearer idea on whether a "structured redress system" which would either require customers to complain, or ensure firms go back through cases and automatically pay compensation, would come next year, MPs heard. |
| Significantly, Mr Rathi said that the regulator was also considering whether the Court of Appeal ruling could have implications for other sectors. | Significantly, Mr Rathi said that the regulator was also considering whether the Court of Appeal ruling could have implications for other sectors. |
| He would not be drawn on which sectors, but analysts have suggested other "big ticket" purchases made on finance could come under the microscope. | He would not be drawn on which sectors, but analysts have suggested other "big ticket" purchases made on finance could come under the microscope. |
| In a wide-ranging hearing, the committee of MPs also questioned the FCA on investment risks facing consumers, financial influencers, and the operational effectiveness of the regulator. | In a wide-ranging hearing, the committee of MPs also questioned the FCA on investment risks facing consumers, financial influencers, and the operational effectiveness of the regulator. |