The Financial Conduct Authority will introduce a scheme to finance mis-selling of vehicles after the market closes on Monday 30 March.
The Financial Conduct Authority (FCA) will set out its plans for the car finance reform scheme after markets close on Monday 30 March. About 14 million people must have a share of the compensation payment of £ 8.2 billion, some £ 700 in the agreement sold badly, but it will be more or less depending on the individual cases.
The settlement plan will cover car finance deals taken out between April 6, 2007 and November 1, 2024. Earlier this month FCA announced that millions of people with wrongful car finance claims going back to 2007 will receive compensation in 2026.
The City Administrator previously said it may make several changes to the proposed compensation plan after receiving more than 1,000 responses to its consultation on the plans.
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The reform scheme is expected to give lenders a three-month implementation period to pay compensation, with five months for older car finance deals.
People could be told within three months of the end of the implementation period how much compensation they are owed, but they could accept it immediately without waiting for the final decision.
Craig Tebbutt, financial health expert for Equifax UK, said: “Preliminarily it is estimated that the average level of compensation would be in the region of £700 per agreement but the final details on the scale, size and timescales are expected to be confirmed on Monday.
“However, there is nothing to prevent customers from checking their documents now and correcting their details in the meantime.”
He said research by a credit reporting firm found that “many consumers do not know how to check their eligibility and expect the process to be a problem, with old or missing documents being a real obstacle”.
Equifax has introduced a car finance review in its new tool that allows people to see a list of their past deals and copy the details, with drivers encouraged to send a complaint to a lender using a template on the FCA website if they think they deserve a payment.
Lenders and car finance providers have been challenging the FCA’s proposals with some arguing that the expected compensation is too high and does not accurately reflect what customers have lost.
The FCA has simplified the compensation process for consumers and firms
- People who complain before the project starts will no longer be asked if they want to opt out. Instead, within 3 months of the end of the performance period, their creditor would tell them what compensation they owed, and how much.
- Customers who receive a repair offer will be able to accept it immediately, rather than waiting for a final decision.
- Firms will not be required to write to customers about the delivery of recorded goods. We can enable multiple channels that meet the needs of customers with the right security measures to prevent fraud.
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