The Money Saving Expert founder recently shared that the FCA plans to initiate an industry-wide redress scheme for car finance miss-selling cases. This scheme will proactively compensate borrowers who qualify under miss-selling criteria without requiring them to lodge complaints. Notably, it addresses two main issues: Discretionary Commission Arrangements (DCA) and Commission Disclosure complaints, affecting millions. There are concerns regarding the effectiveness of the Court of Appeal's surprise ruling on Commission Disclosure, which led to legal uncertainties and has been appealed to the Supreme Court for further clarification.
'The FCA has just put out a statement saying it will consult on 'an industry-wide redress scheme.' Now, consult' is mostly technical, this really means its made up its mind.'
'It plans a section 404 redress scheme that will require lenders to proactively contact all borrowers who met the miss-selling criteria and offer them a fixed redress based on FCA rules.'
'The first is Discretionary Commission Arrangements (DCA). This is about 40% of car finance deals and applies where brokers and dealers could increase the amount of interest they charged customers.'
'These are based on the Court of Appeal surprise ruling that if car finance agreements didn't tell consumers all details of commission including the amount (they rarely did) they were unlawful.'
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