Drivers potentially mis-sold car finance deals might have to wait until December next year for compensation, as regulators have allowed firms extra time to address complaints.
Regulators are investigating if lenders mis-sold products through hidden discretionary commission models, which permitted brokers and car dealers to inflate interest rates on car finance agreements, leading to customers unknowingly overpaying.This practice was prohibited in 2021 after findings showed it cost drivers significantly more compared to the flat fees now used in car finance.
On Tuesday, the FCA announced an "extended pause" in complaint processing to allow time for the possible introduction of a compensation scheme, stating: "It is too early to say if we will intervene in this way, but based on our work so far, it is more likely than when we started our review." The news follows Close Brothers, a leading provider of motor finance, announcing its decision to sell its asset management business to a private equity firm for £200 million. This move is intended to bolster its financial position in light of the ongoing investigation.