Millions in line for payouts from £18bn car loan compensation scheme | Financial Conduct Authority

After saying that the city editor will open a correction plan for consumers affected by the automobile finance scandal, millions of drivers can be given a share of a billions of pounds of compensation.

The Financial Behavior Authority (FCA) will consult banks for a correction plan that may cost between £ 9 billion and £ 18 billion when it starts to pay compensation to consumers next year.

However, the drivers were warned that they would get less than £ 950, which they made a claim.

The guard revealed plans after the Supreme Court overthrew a decision on a car financing that could lead to compensation payments up to 44 billion £, a scale similar to the Payment Protection Insurance (PPI) scandal.

Liberal Democratic Deputy and Effective Treasury Committee Member Bobby Dean, the wrong -selling automobile financing “PPI since the biggest consumer finance scandal,” he said.

“Millions will be lending. The compensation invoice is likely to increase by £ 10 billion. Industry should learn that honesty is important and adjust its practices accordingly.”

FCA said that the price tag of the correction plan, which will include management costs, would be financially less than £ 9 billion and could be “financially higher”. While some scenarios put the total cost up to £ 18 billion, he added that he considered the estimates of this range as “more plausible”.

The regulator plans to include drivers that will start to consult the plan until October and damage the optional commission regulations. In most cases, the plan will pay less than £ 950 for each request, he added.

These optional commissions banned in 2021 inflated the cost of automobile financing by allowing car vendors to demand higher commissions if they put higher interest rates for their customers’ loan loans. Approximately 14.6 million contracts include this regulation between 2007-2020.

The guard will also consult a wider motor financing problems that drivers may have been damaged by ruthless or unfair commission regulations. FCA said it would cover a larger group of debtors group and cover agreements between 2007 and 2024.

On Friday, the Supreme Court overthrew a previous decision that the commissions were illegal and was largely on the other hand with financial companies. The judges approved a single case that was accepted as “unjust ına because of the size of the commission paid to the automobile vendor and how it was announced.

Before the decision, Guardian announced that the Chancellor was so concerned about the effect of Rachel Reeves on the lenders’ impact on the lenders.

Nikhil Rathi, General Manager of FCA, said: “It is clear that some firms violate our laws and rules. It is fair to compensate for customers. In addition, we want the market that trusts by millions of people every year and we want consumers to make a fair agreement.

“Our aim is a fair and easy -to -participation plan, so there is no need to use a request management company or law firm. If you do it, it will cost you a significant portion of the money you receive.

“It will take time to create a plan, but we hope to start buying the money they owe next year.”

The Supreme Court of Court was brought by two expert loans, close siblings and the Firstrant of South Africa in order to challenge three consumers who won the case of appeal court in October.

Justice was asked to review the decision of the Court of Appeal, which claimed that almost all commission regulations were illegal unless it was clearly explained and given under the consumer’s consent.

If approved, millions of people who bought a financial car would mean that the loan, including Santander UK, Close Brothers, Barclays and Lloyds, could be owed to the estimated compensation up to £ 44 billion.

The total would almost compete to the Banks PPI epic, which cost approximately 50 billion pounds.

FCA said the final compensation plan would have to balance a number of concerns, including the level of damage caused by consumers.

However, it should also take into account whether the loans can react to large payments by withdrawing affordable loans from the market. FCA, “consumers to continue to access affordable loans for motor vehicles,” he said.

The automobile financial industry claims that a steep compensation bill will break some lenders, while others will have to offer less or more expensive loans to get their losses back.

FCA also tried to manage the expectations of large individual payments, saying that the borrowers were more likely to return more than the amount of commission paid to the automobile vendor. Although interest will be applied, approximately 3% of this amount was likely to sum up.

Any plan that goes beyond the optional commissions will take into account a number of factors, including how much financial literate the debtor is and how much information is provided when they sign the contract.

Martin Lewis, the founder of Consumer Champion and Moneysaveexpert.com, said that automobile loans can still resist the financial guard plans of the loans.

“Industry can fight it and fight forced. Now what we need… Consistency, transparency we need and we need speed: for both industry and individuals to achieve this. So I hope that the industry does not try to throw more legal waves to slow down everything.”

Alex Neill, the founding partner of consumer Voice, said, “This is a vital opportunity to regain confidence and make the right mistake by dealers and lenders. However, the devil will be in details-Big test is whether the plan will provide a fair compensation level on a scale.

“There will be great obstacles, including the regulator to keep all the affected drivers and to persuade consumers to trust a plan carried out by the wrong constructors.”

FCA said that the loans would assess the allegations of “consistent, efficient and fairly ve and add that“ whether the companies follow the rules and if not, if not, if not, ”.

The city regulator said that anyone who is worried about the car finance agreement did not have to do anything directly to the lending lending to the lenders. The complaints will not be reviewed at least until December after pause by the regulator.