11th Mar 2025 10:01
(Alliance News) - The UK Financial Conduct Authority on Tuesday said it is no longer planning a further update on its review into past use of motor finance discretionary commission arrangements in May.
This follows the judgement by the Court of Appeal in October, which raised the possibility of more widespread liability for the industry, and the subsequent announcement that the Supreme Court will hear an appeal against the Court of Appeal's judgement between April 1 to 3.
The Supreme Court is due to hear an appeal brought by car loan providers challenging the October ruling that sided with consumers who complained about "secret" commissions on car loans.
The judgment ruled that it was unlawful for banks to pay a commission to a car dealer without the customer's informed consent.
The decision opened the door for a potentially fresh wave of complaints from consumers who think they may have been mis-sold car finance in previous years.
The FCA intends to outline the next steps within six weeks of the Supreme Court's decision. This will include whether the FCA is proposing a redress scheme and if so, how it will take it forward.
"Depending on the Supreme Court's decision, we may also consult separately on changes to our rules," the FCA added.
Under a redress scheme, firms would be responsible for determining whether customers have lost out due to the firm's failings, the FCA said, adding if they have, firms would need to offer appropriate compensation.
"We would set rules firms must follow and put checks in place to make sure they do," the FCA stressed.
The FCA explained that a redress scheme would be "simpler" for consumers than bringing a complaint.
"We would expect fewer consumers to rely on a claims management company, meaning they would keep all of any compensation they receive. It would also be more orderly and efficient for firms than a complaint led approach, contributing to a well-functioning market in the future," it added.
Shares in motor finance providers were mixed after the latest development.
Barclays PLC was 1.4% lower at 280.50 pence, Close Brothers Group PLC was flat at 331.20p, Lloyds Banking Group PLC was down 1.7% at 68.04p, Paragon Banking Group PLC was up 0.6% at 718.50p, S&U PLC was up 1.5% at 1,390.00p, Secure Trust Bank PLC was down 3.8% at 417.73p and Vanquis Banking Group PLC was up 5.2% at 56.41p.
By Jeremy Cutler, Alliance News reporter
Comments and questions to [email protected]
Copyright 2025 Alliance News Ltd. All Rights Reserved.
Related Shares:
BarclaysClose BrosLloydsParagon GroupS & UVanquis Banking