Credit, Collections & Insolvency News
The Financial Conduct Authority (FCA) has announced that it is likely to make several changes to the proposed compensation scheme after receiving more than 1,000 responses to its consultation on the plans.
The FCA said that final decisions on the scheme have not yet been made. Given the scale and complexity of the scheme, there is likely to be an implementation period of 3 months, with up to 5 months for older agreements. Firms could choose to process claims under the scheme sooner.
The FCA estimates that lenders could pay out £8.2billion in compensation to consumers.
Shanika Amarasekara, CEO of the Finance & Leasing Association (FLA) said “As the FCA has pointed out, their note will help firms prepare, should the scheme go ahead. However, it also shows a much more proportionate approach to how the scheme could operate in practise. We are pleased that they listened to feedback.
“We hope to see the same proportionate approach applied to the remaining proposals so that the overall scheme, if it goes ahead, would only compensate those customers who actually lost out.” Richard Pinch, Senior Director of Risk at Broadstone, said “The FCA’s proposed implementation period is a sensible acknowledgement of the scale, cost and complexity involved in delivering a motor finance redress scheme of this size. Firms will need time to review historic agreements, build out operational processes and ensure payments are calculated accurately, particularly where older agreements are involved, to maintain consumer confidence.
“Measures to streamline the process should also help reduce delays and unnecessary friction in getting payments to consumers. The changes seek to strike the right balance between ensuring customers receive any compensation they are owed and maintaining a proportionate cost for firms, which is important for the long-term functioning of the motor finance market.”
