The FCA has issued a major update for anyone affected expecting car finance compensation
Firms are already looking into complaints regarding the mis-sellings(Image: Getty Images)
Motor finance firms must start handling complaints two months earlier than originally planned, according to the UK’s financial watchdog, as it finalises a compensation scheme for those affected by the mis-selling saga.
The Financial Conduct Authority (FCA) will be lifting a pause on the handling of certain motor finance complaints on May 31, rather than the July 31 deadline it previously proposed.
Firms should already be investigating complaints but have not needed to respond to them since the FCA put the process on pause in January 2024.
This was intended to prevent disorder and inconsistency while it put together plans for an industry-wide compensation scheme.
“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 said in an update on Wednesday.
The proposed scheme will compensate motorists 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 plans, which are expected to see around 14 million deals eligible for compensation, have been met with significant pushback from lenders.
It is currently consulting on the details of the scheme, which is expected to launch early next year.
The FCA said that ending its pause on handling complaints two months earlier than planned gives firms sufficient time to be ready to respond to them.
It expects that the majority of complaints will fall within the scope of its redress scheme – but firms will also have to be ready to respond to those that do not.
