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FCA plans compensation for car finance mis-selling
Consultation on redress eligibility begins in October, with records from 2007 under scrutiny.
The car finance industry questions the feasibility of redress dating back to 2007.
Car finance compensation plan raises serious concerns
The Financial Conduct Authority is set to consult on a compensation plan for car finance borrowers affected by unfair lending practices. The plan may involve redress for customers from as far back as 2007. However, industry experts, including Mr. Hadrill, express concerns over the practicality of such a scheme, noting that both firms and customers may lack the necessary records to substantiate claims. FCA chief Nikhil Rathi acknowledged potential complications, suggesting that some claims might need resolution through the courts for missing information.
Key Takeaways
"[There is] a major concern, really, about the redress scheme going back to 2007."
Mr. Hadrill expresses the impracticality of restoring claims with missing records.
"Weren't going to have to work through those issues in the consultation where one or the other party doesn't have all the details."
Nikhil Rathi addresses challenges in resolving claims due to missing information.
The consultation starting in October is likely to stir more debate within the car finance sector. While the intention to provide compensation is clear, the logistical hurdles pose a significant challenge. As Mr. Hadrill pointed out, the lack of documentation could lead to many deserving claims being sidelined. With the market’s changing landscape, firms face risks in managing their historical records. This situation calls for a careful balance between protecting consumer rights and considering the practical realities of historical data availability.
Highlights
- No companies have the details from 2007
- Lost paperwork means lost compensation for many
- Claiming compensation could become a legal battle
- Our industry is at risk without accurate records
Concerns over compensation eligibility
The compensation plan may leave many borrowers without the necessary paperwork, potentially denying them aid due to impractical record-keeping requirements.
The upcoming consultation may redefine fair lending practices in the car finance sector.
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