UK's Financial Watchdog Sided with Lenders in Car Finance Redress Scheme
A scathing report by a cross-party parliamentary group has accused the UK's financial regulator, the Financial Conduct Authority (FCA), of "nakedly" siding with lenders in its proposed compensation scheme for car finance victims. The scheme aims to compensate borrowers who were overcharged as a result of commission arrangements between lenders and car dealers.
Critics argue that the FCA's proposals fall short of what is needed, with some estimating that borrowers could be entitled to up to £15.6 billion, but the regulator has forecast a much lower figure of £8.2 billion-£9.7 billion. The parliamentary group's report claims that the FCA's estimates are based on flawed assumptions and have been influenced by lenders' concerns over profits.
Banks under the scheme will reportedly pay out an average of £700 per claim, significantly less than what some borrowers could receive by taking their cases to court. However, this comes with a warning: borrowers may end up losing up to 30% of their compensation in legal fees if they use claims firms.
Lenders have long warned that a massive bill could deter investors, force some lenders to fold, or raise borrowing costs for consumers as lenders try to recoup their costs. The chancellor's intervention in a landmark supreme court hearing earlier this year seemed to further sway the regulator's estimates downward.
However, critics argue that the FCA has been too lenient on lenders' interests and is instead working to protect profit margins rather than consumer pockets. A Labour MP on the parliamentary group described the scheme as "not fit for purpose" and claimed that lenders' lobbying efforts had influenced the regulator's proposals.
The FCA maintains that it has proposed a fair scheme to compensate motor finance customers, but critics argue that it falls short of what is needed. As one senior MP put it, the regulator needs to "draw a line under this issue quickly" to restore trust in the market and ensure that consumers receive the compensation they are entitled to.
The controversy raises questions about the role of regulators in protecting consumer interests and ensuring fair practices in the financial sector.
A scathing report by a cross-party parliamentary group has accused the UK's financial regulator, the Financial Conduct Authority (FCA), of "nakedly" siding with lenders in its proposed compensation scheme for car finance victims. The scheme aims to compensate borrowers who were overcharged as a result of commission arrangements between lenders and car dealers.
Critics argue that the FCA's proposals fall short of what is needed, with some estimating that borrowers could be entitled to up to £15.6 billion, but the regulator has forecast a much lower figure of £8.2 billion-£9.7 billion. The parliamentary group's report claims that the FCA's estimates are based on flawed assumptions and have been influenced by lenders' concerns over profits.
Banks under the scheme will reportedly pay out an average of £700 per claim, significantly less than what some borrowers could receive by taking their cases to court. However, this comes with a warning: borrowers may end up losing up to 30% of their compensation in legal fees if they use claims firms.
Lenders have long warned that a massive bill could deter investors, force some lenders to fold, or raise borrowing costs for consumers as lenders try to recoup their costs. The chancellor's intervention in a landmark supreme court hearing earlier this year seemed to further sway the regulator's estimates downward.
However, critics argue that the FCA has been too lenient on lenders' interests and is instead working to protect profit margins rather than consumer pockets. A Labour MP on the parliamentary group described the scheme as "not fit for purpose" and claimed that lenders' lobbying efforts had influenced the regulator's proposals.
The FCA maintains that it has proposed a fair scheme to compensate motor finance customers, but critics argue that it falls short of what is needed. As one senior MP put it, the regulator needs to "draw a line under this issue quickly" to restore trust in the market and ensure that consumers receive the compensation they are entitled to.
The controversy raises questions about the role of regulators in protecting consumer interests and ensuring fair practices in the financial sector.
Anyway, where was I? Ah yeah, the UK's Financial Watchdog thingy. So, it seems like they're siding with lenders instead of consumers again 
. I mean, £8.2 billion-£9.7 billion is still a lot of money, but it's not even close to what some people could've gotten if they'd fought for it in court 
. And don't even get me started on the legal fees... 30% of their compensation? That's just cruel 
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. Can't they see that this is all about fairness and protecting consumers? It feels like they're more concerned with keeping lenders happy than actually doing their job 
. And what's up with the FCA's estimates being influenced by lenders' concerns? That's just sketchy 
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UK's car finance redress scheme is a mess! 
that's just not right, fam! 
lenders are taking advantage, and the FCA is letting them get away with it 
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. The FCA's always been a bit soft on lenders, if you ask me 
. They just want to keep the financial sector stable & profitable 
. But what about consumers? 
. And then you've got borrowers losing up to 30% of their payout to legal fees 
. The government needs to step in & make sure the FCA is doing what's best for consumers, not just lenders' bottom lines 
. The FCA needs to be more transparent about their assumptions and consider the impact on consumers, not just the profit margins of these big banks 
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! The FCA's proposed scheme is basically a slap in the face for all those people who got screwed by lenders overcharging them on car finance. I mean, come on, £15.6 billion could make a huge difference to so many people's lives but instead we're looking at a paltry £8.2-£9.7 billion? It's just not right 
.
. It's time for some real change in our financial sector! 
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. That's like getting scammed twice! The FCA needs to draw a line under this issue quickly and make sure lenders are held accountable for their actions 
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. The FCA needs to take a step back and really consider what's best for consumers, not just lenders 
. regulators have gotta make some tough calls and they're just trying to find a balance here 
. The FCA needs to do better than this... draw the line and protect consumers, ya know? 
But at the same time, if banks only have to pay out an average of £700 per claim, it's not like they're going to go bankrupt or anything.