Motor finance scandal: FCA boss tells unhappy customers to complain
The boss of the Financial Conduct Authority (FCA) has told MPs that unhappy car buyers who feel their loan was mis-sold should complain to their lenders.
Facing the Commons Treasury Committee, Nikhil Rathi encouraged borrowers who were “not satisfied” with the terms of their finance agreement to “contact your lender and put in a complaint” if concerned.
Bosses at the FCA faced a grilling from the Committee on Tuesday, whose chair Dame Meg Hillier described the ongoing saga over the sale of car finance as “one unholy mess,” with dealers and lenders accused of being opaque with customers.
Some 2m new and second-hand British cars are bought under finance agreements in which an initial deposit is paid, followed by a monthly interest fee.
The FCA has been reviewing whether buyers should be compensated in cases where dealers had received commission payments from lenders based on the interest rate charge.
So-called discretionary commission arrangements (DCAs) were banned in 2021, yet the wider banking sector has been flooded with thousands of historic complaints as consumers look for compensation.
In a landmark case in October, the Court of Appeal ruled that a broker could not lawfully receive a commission from the lender without obtaining customer consent. The decision potentially exposes banks to billions in extra compensation costs and
Speaking on the ruling, Rathi said courts had given a different reading of the law on fixed commissions, while the FCA had already been looking into DCAs.
The regulator is considering whether it could have wider implications for other sectors, MPs were told, although Rathi did not say which.