Major update for 60,000 drivers on mammoth car finance compensation bill
A MAJOR update has been issued on the car finance commission scandal with a mammoth compensation bill expected. The UK’s motor finance industry is bracing for a potential multi-billion pound …
A MAJOR update has been issued on the car finance commission scandal with a mammoth compensation bill expected.
The UK's motor finance industry is bracing for a potential multi-billion pound compensation bill as the Financial Ombudsman Service (FOS) grapples with a surge in complaints related to commission practices.
1
The FOS helps resolve disputes between consumers and lendersCredit: AlamyOver 60,000 complaints are awaiting resolution - a staggering threefold increase since May 2024 - highlighting a potential scandal that could rival the infamous Payment Protection Insurance (PPI) debacle.
The Financial Conduct Authority (FCA) launched an investigation earlier this year into whether motorists were unknowingly overcharged when they took out car loans.
The investigation focuses on past practices where banks allowed car dealerships and brokers to set their own interest rates on loans.
Under a now-banned discretionary commission arrangement (DCA), dealerships and brokers had a financial incentive to charge higher interest rates, as their commission increased proportionally.
Read more in moneyHowever, many customers were unaware of this practice.
As a consequence, individuals who financed the purchase of cars, motorbikes, or vans before 28 January 2021 - when DCA was prohibited - could be entitled to substantial compensation.
James Dipple-Johnstone, interim chief ombudsman at the Financial Ombudsman Service (FOS), appeared before the Treasury Committee today to discuss the scale of these complaints and how they compare to the PPI scandal.
He told MPs: "We've got over 60,000 cases with us relating to motor finance commission.
DON'T BANK ON IT Bank of Scotland to close 22 branches - check if your local is affected
STAR QUALITY Two Scots restaurants awarded Michelin Star - check out the full list
MAKE ENDS MEAT Scots food factory to close in weeks with dozens of staff to lose their jobs
BANK ON IT Map reveals 189 Lloyds, Halifax and Bank of Scotland branches closing in 2025
"So it is quite a significant block of work, which is why we’ve put a team onto it, not just to leave it there until the courts decide what they’re going to decide, but to start to prepare it so we can move it through quickly.
"Because we'll have to be dealing with that next year and the year after."
Martin Lewis explains potential new Financial Conducts Authority rulingThe Supreme Court is scheduled to hear an appeal in March 2025 regarding a landmark Court of Appeal ruling from October 2024.
This ruling declared it unlawful for car dealers, acting as brokers, to receive commission from lenders without the fully informed consent of the customer.
This applies to both discretionary commission arrangements (DCAs), where dealers set interest rates, and non-discretionary commissions.
The appeal, brought by Close Brothers and FirstRand Bank, carries significant implications for the motor finance industry.
Should the Supreme Court uphold the Court of Appeal's decision, lenders could face a mammoth compensation bill, estimated to exceed £30billion.
Asked how motor finance complaints compare with the scale of PPI, Mr Dipple-Johnstone said: "Obviously the service saw a lot more during PPI but there was a wider selling of that kind of product.”
He said colleagues had said of the PPI scandal: "It was a slow burn, then it increased quite dramatically, and then the service cleared the work through.
"So what we've tried to do is learn from that event, prepare our ground, make sure we've got the training in place, we can scale up our resources quickly, we understand the product, we've got the legal advice, we've got the digital platforms to deal with the cases, so that if they do come through to us, we’re able to scale up quickly, so we can provide the best service we can to customers."
According to the FCA, on a typical £10,000 motor finance agreement, discretionary commission arrangements could have caused customers to pay an additional £1,100 in interest over a four-year term.
The FCA has since extended the deadline for lenders to respond to complaints, meaning borrowers whose lenders received other forms of commission may now also be eligible for compensation.
In anticipation of the financial fallout, several major lenders have already set aside substantial funds.
Lloyds Banking Group has allocated £450million to cover potential fines, while Santander announced last year that it had reserved £295million for possible payouts.
Close Brothers, meanwhile, has opted to withhold dividends to investors and has taken steps to bolster its balance sheet by up to £400 million.
What is the FCA investigating and who is eligible for compensation?
By James Flanders, Chief Consumer Reporter:
What is being investigated?
The FCA announced in January, 2024 that it would investigate allegations of "widespread misconduct" related to discretionary commission agreements (DCAs) on car loans.
When you buy a car on finance, you are effectively loaned the value of the car while you pay it off.
These loans have interest payments charged on top of them and are often organised on behalf of lenders by brokers - usually the finance arm of a dealership.
These brokers earn money in the form of commission - a percentage of the interest payments on the loan.
DCAs allowed brokers to, to a certain extent, increase the interest rate on a loan, which in turn increased the amount of commission they received.
The practice was banned by the FCA in 2021.
Who is eligible for compensation?
The FCA estimates that around 40% of car deals may have been affected before 2021.
There are two criteria you must meet to have a chance at receiving compensation.
First, you must be complaining about a finance deal on a motor vehicle (including cars, vans, motorbikes, and motorhomes) that was agreed upon before January 28, 2021.
Second, you must have bought the vehicle through a mechanism like Personal Contract Purchase (PCP) or Hire Purchase (HP), which make up the majority of finance deals and mean you own the vehicle at the end of the agreement.
Drivers who leased a car through a Personal Contract Hire, where you give the car back at the end of the lease, are not eligible.
The FCA had initially planned to publish the results of its investigation in September, but this has now been postponed to May 2024.
Additionally, firms now have until December 4, 2025, to respond to customer complaints.
The FCA says it has had to push back the deadline due to it taking "longer than expected to get the data" it needed from implicated car finance firms.
Investigators have also been unable to complete their review because of a pending court case surrounding one of the complaints.
It's worth nothing, the FCA's decision to extend the deadline to December 4 next year is just when firms have to have respond to any complaints.
Customers are still encouraged to file their complaints before this date, and in some cases, there are specific time limits for doing so.
You can find more information about any time limits the regulator sets by visiting fca.org.uk/consumers/car-finance-complaints.
Consumer finance website MoneySavingExpert.com offers an email template to help you complain to your finance provider.
You can download this by visiting moneysavingexpert.com/reclaim/reclaim-car-finance.
Alternatively, you can complain directly without using the template.
It's crucial for anyone who took out car finance to file a claim, even if a previous claim was denied.
In your complaint, ask whether you were overcharged due to your broker receiving a commission and request the company to rectify this if it occurred.
If you're unsatisfied with the company's response, you can escalate your complaint to the Financial Ombudsman Service (FOS) at no cost.
Read more on the Scottish SunYou have until July 29, 2026, or up to 15 months from the date of the company's final response letter, whichever is longer.
Avoid using a claims management firm, as they will take a portion of any successful claim.
Seth Rogen explained why he is 'very worried' that real Hollywood executives will recognize themselves in series 'The Studio.'
Read more >> : Cick here
 |
 |
 |
 |
 |
 |
 |
â??Itâ??s sort of like an almost overly charged male rite of passage when you go hunting for your first time,” the “Call Me By Your Name” actor explained.
Read more >> : Cick here
|
|
|
|
 |
|
|
:max_bytes(150000):strip_icc():focal(749x249:751x251)/tyra-banks-swim-suit-021025-c7332ab9a9cf49d88cf0db40f3dff959.jpg)
In February 2007, Tyra Banks took body shamers to task after tabloids slammed her for exaggerated weight gain.
Read more >> : Cick here
|
|
|
|
:max_bytes(150000):strip_icc():focal(749x249:751x251)/tyra-banks-swim-suit-021025-c7332ab9a9cf49d88cf0db40f3dff959.jpg&description=Tyra Banks Clapped Back at Body Shamers in an Unforgettable Moment, 18 Years Ago: 'Kiss My Fat Ass' In February 2007, Tyra Banks took body shamers to task after tabloids slammed her for exaggerated weight gain. %23tyrabanks) |
|
|
As the Best Picture race heats up, the competition for Best Actor is going off the rails.
Read more >> : Cick here
|
|
|
|
 |
|
|
On Tuesday ,Rauw Alejandro released the cinematic and trippy video for "Ni Me Conozco," in which the singer resolves some inner feelings.
Read more >> : Cick here
|
|
|
|
 |
|
|
'Street Fighter' actor Peter Navy Tuiasosopo has died. He was 61. His son, Manoah, announced his death in a tribute on Facebook, and revealed to TMZ that his father died from heart complications in Phoenix. The veteran star of TV and movies was well known for his role in the video game adaptation of the cult classic, plus, dozens of guest spots on shows like 'NCIS,' 'New Girl' and 'Mayans M.C.'
Read more >> : Cick here
|
|
|
|
 |
|
|
Will Smith suffered a Matrix mishap as he gave fans a sneak peek at the filming of his new music video. The 56-year-old shared behind-the-scenes footage of his new single “Beautiful Scars,” where he can be seen channeling Keanu Reeves’ Matrix character. The film, which depicts a dystopian future in which humanity is trapped inside a simulated reality, became famous across the globe following its release in 1999. Smith captioned his video: “Matrix is a young man’s game hahaha. Mad respect to Keanu. Beautiful Scars BTS is out!!”
Read more >> : Cick here
|
|
|
|
 |
|
|
The Beatles founder Paul McCartney has announced details of a last-minute concert at the Bowery Ballroom in New York tonight (February 11th, 2025).
Read more >> : Cick here
|
|
|
|
. %23boweryballroom) |
|
|
Universal’s 'Dog Man' barked its way to the top of the U.K. and Ireland box office, debuting with a commanding $4 million.
Read more >> : Cick here
|
|
|
|
 |
|
|
Willie Nelson made it big a little later in life, but the outlaw country icon also wrote a few gorgeous and underrated songs in his 20s.
Read more >> : Cick here
|
|
|
|
 |
|
|
Twitter (X), Inc. was an American social media company based in San Francisco, California, which operated and was named for its flagship social media network prior to its rebrand as X. In addition to Twitter, the company previously operated the Vine short video app and Periscope livestreaming service
Twitter (X) is one of the most popular social media platforms, with over 619 million monthly active users worldwide. One of the most exciting features of Twitter (X) is the ability to see what topics are trending in real-time. Twitter trends are a fascinating way to stay up to date on what people are talking about on the platform, and they can also be a valuable tool for businesses and individuals to stay relevant and informed. In this article, we will discuss Twitter (X) trends, how they work, and how you can use them to your advantage.
What are Twitter (X) Worldwide Trends?
Twitter (X) Worldwide trends are a list of topics that are currently being talked about on the platform and also world. The topics on this list change in real-time and are based on the volume of tweets using a particular hashtag or keyword. Twitter (X) Worldwide trends can be localized to a Worldwide country or region or can be global, depending on the topic's popularity.
How Do Twitter (X) Worldwide Trends Work?
Twitter (X) Worldwide trends are generated by an algorithm that analyzes the volume of tweets using a particular hashtag or keyword. When the algorithm detects a sudden increase in tweets using a specific hashtag or keyword, it considers that topic to be trending.
Once a topic is identified as trending, it is added to the list of Twitter (X) Worldwide trends. The topics on this list are ranked based on their popularity, with the most popular topics appearing at the top of the list.
Twitter (X) Worldwide trends can be filtered by location or category, allowing users to see what topics are trending in their area or in a particular industry. Additionally, users can click on a trending topic to see all of the tweets using that hashtag or keyword.