Regulatory Alerts2025-11-04
Added · Updated
CP25/27: Motor Finance Consumer Redress Scheme
The Financial Conduct Authority proposes an industry-wide compensation scheme for motor finance customers with agreements between April 2007 and November 2024 where commission was payable by the lender to the broker. The scheme covers relationships deemed unfair due to inadequate disclosure of discretionary commission arrangements, high commissions (equal to or greater than 35% of total cost of credit and 10% of the loan), or tied arrangements. Lenders are required to deliver the scheme, contacting consumers within three months if they have previously complained and within six months otherwise, while brokers must cooperate by providing relevant data. Compensation is calculated based on repayment of commission plus interest for cases closely aligning with Supreme Court precedents, or an average of estimated loss and commission paid for other cases, with an estimated average payment of £700 per agreement.