Car loan scandal victims told to complain to their lender

A saga implicit the merchantability of car concern is "one unholy mess" and customers tin kick to their lender if they are aggrieved, MPs person heard.

Lenders and dealers person been accused of hiding committee payments made erstwhile cars were bought connected concern deals.

Facing the Commons Treasury Committee, bosses astatine the fiscal regulator were told the concern was a messiness that would instrumentality a agelong clip to resolve.

Dissatisfied car buyers should complain, if they felt their indebtedness was mis-sold, the Financial Conduct Authority (FCA) said. Thousands of drivers person already done so.

The immense bulk of caller cars, and galore second-hand ones, are bought with concern agreements.

About 2 cardinal are sold this mode each year, with customers paying an archetypal deposit, past a monthly interest with involvement for the vehicle.

The FCA has been considering whether car buyers should beryllium compensated for cases erstwhile car dealers received a committee from lenders, based connected the involvement complaint charged to the customer. These arrangements were banned successful 2021.

A caller Court of Appeal ruling widened the saga to different types of "hidden" committee payments and raised the anticipation of millions of motorists receiving pay-outs. Banks person acceptable speech hundreds of millions of pounds arsenic a result.

Dame Meg Hillier described the concern arsenic "one unholy mess" due to the fact that dealers and lenders whitethorn not person been transparent to their customers.

She asked what proposal determination was for anyone caught up successful it.

"If you are not satisfied with the presumption of your concern agreement, you should interaction your lender and enactment successful a ailment to your lender if you are concerned," said FCA main executive, Nikhil Rathi.

Hundreds of thousands of complaints are apt to person already been made, perchance ending with the largest compensation strategy regarding fiscal products since the outgo extortion security (PPI) saga.

Lawyers for car buyers accidental cases should proceed connected the ground of the Court of Appeal ruling, but Mr Rathi was much circumspect.

He said that the courts had fixed antithetic interpretations of the instrumentality regarding fixed commissions, portion the FCA had already been looking into discretionary committee arrangements.

Lenders progressive successful the lawsuit person asked the Supreme Court to see the case. In the meantime, dealers and lenders person been fixed a longer play to woody with complaints.

A clearer thought connected whether a "structured redress system" which would either necessitate customers to complain, oregon guarantee firms to spell backmost done cases and automatically wage compensation, would travel adjacent year, MPs heard.

Significantly, Mr Rathi said that the regulator was besides considering whether the Court of Appeal ruling could person implications for different sectors.

He would not beryllium drawn connected which sectors, but analysts person suggested different "big ticket" purchases made connected concern could travel nether the microscope.

In a wide-ranging hearing, the committee of MPs besides questioned the FCA connected concern risks facing consumers, fiscal influencers, and the operational effectiveness of the regulator.