Couldn't I have bad car loan deals? Let me check.
The Financial Conduct Authority (FCA) has announced a compensation scheme for individuals who purchased cars under certain finance schemes between April 2007 and 28 January 2021. The scheme is aimed at those who were affected by discretionary commission arrangements that were not properly disclosed.
The scheme applies to finance schemes such as hire purchase and personal contract purchase (PCP), but not to personal contract hire or hire agreements not involving finance loans. If you believe you were overcharged due to undisclosed commission fees impacting your interest rates, you might be eligible for compensation.
To be eligible, you must have entered into a car finance agreement before 28 January 2021. Not all customers under car finance schemes will be eligible, as some commission payments were legal. However, cases where commission was hidden or improperly disclosed may receive compensation.
The FCA estimates most eligible customers will receive compensation usually under £950 per agreement, depending on the level of harm caused. It's important to note that if you have already raised a complaint with your lender before, you likely do not need to take further action.
The FCA aims for a straightforward compensation scheme without the need for consumers to involve claims management companies or lawyers, which can reduce the payout by about 30% in fees. The FCA will consult on the scheme details through 2025, with payouts expected to begin in 2026.
Adrian Dally, the director of motor finance at the Finance and Leasing Association, argues that the payout levels in the compensation scheme look too high at this stage. The exact percentage of motorists who will be eligible for a payout is not yet known, but it's estimated that up to 40% of motorists who entered PCP or hire purchase agreements between 2007 and 2021 could be eligible.
Niall Paterson is speaking to Sky's business correspondent Gurpreet Narwan about the compensation scheme. Emily Hulme is the producer of the segment, and Wendy Parker is the editor. The compensation scheme is still under consultation by the FCA.
If you believe you might be eligible for compensation, it's recommended that you first complain directly to your finance provider. If you are dissatisfied with their response, you can escalate to the Financial Ombudsman Service. Stay tuned for more updates on this developing story.
If you have entered into a car finance agreement under a hire purchase or personal contract purchase (PCP) scheme between April 2007 and 28 January 2021, you might be eligible for compensation if you believe you were overcharged due to undisclosed commission fees affecting your interest rates. Personal-finance matters can greatly impact your overall business health, making it essential to understand your rights regarding such financial arrangements.
