Mon, 04 Aug 2025

Mon, 04 Aug 2025 Car finance redress plan 'impractical', say lenders

Many firms and individuals may no longer have records going back to 2007, the car finance industry says.

* The Finance and Leasing Association (FLA) has criticized the proposed compensation scheme for car finance mis-selling, calling it "completely impractical".
* The regulator's plan may cover loans from as far back as 2007, but firms and customers may not have kept records.
* A Supreme Court ruling narrowed the scope of potential payouts over hidden commissions on car loans, leaving open possible redress for millions of drivers.
* The Financial Conduct Authority (FCA) estimates that up to 14 million people could be eligible for compensation.
* The FCA plans to start consulting in October on the issue of compensation, but victims are likely to get less than £950 per deal.
* Shares in car finance lenders surged after the ruling, with Lloyds jumping up 9% and Close Brothers soaring by 20%.
* The finance industry is expected to cover the full costs of any potential compensation scheme, which could cost between £9bn and £18bn.
* The FLA's Stephen Hadrill warned that the "cost will have to be absorbed somewhere", ultimately making borrowing more expensive for consumers.
* The FCA has said it expects a "healthy finance market" to continue despite the redress scheme, and customers do not need to use a claims management company or law firm to take part.
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