15 March 2024 , 09:58
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The financial regulator has shared a major update on its investigation into the mis-selling of car finance.
The boss of the Financial Conduct Authority (FCA) confirmed that it is "improbable" that a major investigation into hidden, unfair car finance commission would find no evidence of wrongdoing. Nikhil Rathi, chief executive of the FCA made the comments in a speech delivered to the financial services industry yesterday (Thursday, March 14).
He said: "While certainty is not something I can provide today, and I cannot prejudge what we might find, I can say in my view it is improbable we will find nothing to report as we look at historic motor finance sales. Some firms will be better placed than others."
Rathi also confirmed that the FCA's inquiry would proceed on a "more condensed time frame" compared to its earlier action on Payment Protection Insurance (PPI). To do this, the FCA has called on car finance firms to cooperate fully and provide data "comprehensively and promptly".
The investigation will be looking into car finance deals taken out before January 28, 2021, which contained “discretionary commission arrangements”. This allowed car dealers to adjust the interest offered to customers, to increase their commission.
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This practice was banned by the FCA in 2021, however since then, the FCA said “most” complaints relating to this before the ban was put in place are being rejected by motor finance firms because they feel they “have not acted unfairly”.
The Financial Ombudsman recently ruled in favour of two complaints, while other claims have also been brought in the County Courts. The FCA said this is “likely to prompt a significant increase” in new cases being brought forward. As a result, the FCA will now investigate if there has been “widespread misconduct” and if consumers have “lost out” as a result.
MoneySavingExpert.com founder Martin Lewis has been raising awareness of the case so consumers do not miss out on compensation payouts if they come. He is now also urging Brits log a complaint as soon as possible, in case a timeframe is later imposed by the FCA.
To help do this, he created a letter formatting tool on his MoneySavingExpert.com website.. The FCA is currently scheduled to publish its findings on September 25, 2024.