Secret Commissions Trigger Potential Market Meltdown for UK Car Lenders

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Motor Finance News

Car Loans,FCA,Financial Conduct Authority

The motor finance industry is in turmoil following a court ruling on secret commissions, with major lenders facing potential billions in compensation and a possible FCA redress scheme.

As lenders face an avalanche of compensation claims over a brewing motor finance scandal, Lars Mucklejohn asks whether the industry is headed for a PPI-scale disaster. Motor finance providers are scrambling to avoid a full-blown market meltdown after a London court ruling on “secret” car loan commissions sparked chaos across the sector this week.

The FCA’s probe is focused on DCAs between 2007 and 2021, when they were banned. The agreements were industry standard and included in some three-quarters of car loans during the period. The wider banking sector has been inundated with historic complaints as consumers look for compensation and claims management firms take advantage of the situation.

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