Source: Sharecast
The Financial Conduct Authority, which banned brokers from lifting interest rates on financing deals in 2021, said many customers have filed complaints with firms claiming compensation for commission deals struck prior to the ban. It has now started an investigation.
It said motor finance firms were rejecting most complaints because they believe they have not acted unfairly nor caused customer loss based on the applicable legal and regulatory requirements at the time.
The FCA said it would use its powers to review historical arrangements and sales across several firms, to ensure fair practice.
"If we find there has been widespread misconduct and that consumers have lost out, we will identify how best to make sure people who are owed compensation receive an appropriate settlement in an orderly, consistent and efficient way," the FCA said in a statement.
The FCA said it would pause the eight-week deadline for motor finance firms to provide a final response to relevant customer complaints.
Consumers will also have up to 15 months to refer their complaint to Financial Ombudsman, rather than usual six, the FCA said.
The Financial Ombudsman Service has considered some complaints rejected by firms and found in favour of complainants in two recent decisions.
“This is likely to prompt a significant increase in complaints from consumers to firms and the Financial Ombudsman,” the FCA said.
“Claims have also been brought in the County Courts, some of which have been upheld. So, there is significant dispute between some firms and consumers on whether firms have breached legal and regulatory requirements.”
Reporting by Frank Prenesti for Sharecast.com
