Millions of motorists will have to wait until next year to receive motor finance compensation after Supreme Court case, competition watchdog reveals
The Financial Conduct Agency announced the development this afternoon after a Supreme Court ruling on Friday – but said it would 'take time to establish a (compensation) scheme'.
The FCA estimates 'most individuals will probably receive less than £950 in compensation' per claim, with the total value of the scheme between £9bn and £18bn. Some individuals who bought several cars via hire purchase could receive multiple payouts.
Officials said they hope 'to start getting people any money they are owed next year'.
In the meantime, the watchdog urged people to wait rather than taking action via a claims management company or law firm as it could 'cost you a significant chunk of any money you get'.
It said it has already taken action against publishers of 225 adverts 'about potentially exaggerated amounts of compensation'.
The FCA's stance was today backed by Money Saving Expert guru, who told his followers on X (formerly known as Twitter) to avoid claims firms or solicitors and that 'the most important thing is to DO nothing'.
The FCA said 'many motor finance firms were not complying with rules or the law by not providing customers with relevant information about commission paid by lenders to the car dealers who sold the loans'.
It defended its action in the wake of the court ruling, saying it 'moved quickly' on 'steps to set up a proposed compensation scheme because it wants to provide clarity and certainty to consumers, firms and investors as quickly as possible'.
But FCA officials stressed that 'want to ensure the integrity of the motor finance market so it works well for consumers now and in the future' and that the compensation scheme would need to 'balance principles including fairness, timeliness, and certainty'.
Nikhil Rathi, chief executive of the FCA, said: 'It will take time to establish a scheme but we hope to start getting people any money they are owed next year.
'Our aim is a compensation scheme that's fair and easy to participate in, so there's no need to use a claims management company or law firm.'
He added: 'It is clear that some firms have broken the law and our rules. It's fair for their customers to be compensated.
'We also want to ensure that the market, relied on by millions each year, can continue to work well and consumers can get a fair deal.'
The FCA is working on rules to govern the finance schemes, used by 2.2m people each year, to ensure lenders 'consistently, efficiently and fairly decide whether someone is owed compensation and how much'.
The FCA said motorists who have already complained don't need to do anything but urged others to submit a complaint, if they think they have paid too much for motor finance.
It added it would be 'working intensively and engaging widely over the coming weeks on the detail of how a scheme would work'.
The Supreme Court's ruling found that hidden commissions from lenders to dealers on car loans were not in themselves unlawful, excluding several million motorists from making claims.
The court said car dealers did not need to operate with a 'single-minded' duty to 'act only in their customers' best interests' when arranging finance – and rejected a claim finance companies had bribed car dealers.
But it found the payment of particularly large commissions, without customers' knowledge, were unfair and affected customers in those cases should be compensated.
The five judges said a case where the commission was 55pc of the total charge for credit was 'unfair' and that a failure to disclose the 'exact nature of the commission, and the concealment of the commercial tie between the dealer and the lender' was wrong.
Analysts for investment bank Jefferies heralded the judgement as a 'huge win' for car financing firms as it means the companies can avoid a much larger compensation bill which some market experts forecasted could be as large as that for PPI (payment protection insurance). The scandal led to payouts totalling £50bn.
To make a report about potential mis-selling of car finance, visit https://www.fca.org.uk/consumers/car-finance-complaints
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Daily Mail
24 minutes ago
- Daily Mail
Class warfare is back under this spiteful government – and we will ALL end up paying a ruinous price: LEO MCKINSTRY
The current government is increasingly running not on a desire to improve the country, or out of any kind of political mission - but on sheer spite. Having failed to achieve the elusive economic 'growth' he and his inept Chancellor Rachel Reeves promised before the election, Sir Keir Starmer is now trying to revive his fortunes by stoking class envy.
BBC News
24 minutes ago
- BBC News
Premium Bonds: Unclaimed prizes from NS&I draws pass £100m
More than £100m of premium bond prizes remain unclaimed amid criticism that the government-owned bank which operates the savings scheme is not doing enough to find the the 2.5 million unclaimed prizes are 11 winners of £100,000 - the second-largest prize say the process to trace accounts needs reform as it is too difficult for people gifted Premium Bonds, or those who only ever had paper National Savings and Investments (NS&I) said it had paid more than 99% of the prize-winners since starting its tax-free draws in 1957. Wills and probate solicitor Patrice Lawrence said she had helped seven people trace accounts including clients, and friends and family."It's shocking that a government-owned bank is sitting on nearly £100m [in unclaimed prizes] that doesn't belong to it during a cost of living crisis," she told the Bonds are a lottery-style, government-backed savings account where people can put money in and take it out when they want. The amount of interest paid in return for each £1 bond is decided by a monthly prize draw, with some holders receiving nothing and others getting prizes from £25 all the way up to a £1m said every jackpot millionaire had received their money. Since the first draw in June 1957, its Electronic Random Number Indicator Equipment - known as ERNIE - has drawn a total of 772 million prizes worth a combined £ Bonds prize winners should receive notifications of their winnings via text message, email or post if they have registered their customers, however, relocate and forget to update their bond holdings are not registered. For example, people may be unaware they were gifted bonds as children, or they were never given the paper certificate carrying the account retail director Andrew Westhead said the bank recognised bonds purchased before digitisation were "much harder to trace". Nearly 23 million people had Premium Bonds accounts worth a combined £130bn, as of the end of March originally contacted winners by post and sent cheques, but since 2011 holders could choose to have prizes paid directly into a bank account or reinvested in more bonds. The oldest unclaimed prize was £25 won in November 1957 in South Westhead said: "The £103m of prizes currently unclaimed represents just 0.28% of the total £37bn awarded by ERNIE over nearly seven decades."He said the bank provided information online and through its call centre on how to claim winnings, publicised details of unclaimed prizes and encouraged customers to use its prize can also use its tracing service to track down mislaid bonds, he also said that, as of the end of March 2025, it had been asked to carry out 781,576 those, 465,048 were successful, and 443,806 accounts had been found with value. The bank could not say how many of those people had their original paperwork. Melanie Clarke did not initially know what was in front of her when she found premium bond papers among her late father Hugo's mother explained some were a gift for her and her sister, while some remained in her parents' said: "They're quite delicate and flimsy…[I thought of the papers] what part of that is important? How do I found out any information about this?"Mr Clarke first came from Trinidad to the UK as an RAF Serviceman, aged 19, as part of the so-called Windrush did not leave a will when he died from natural causes related to vascular dementia in clearing his possessions Ms Clarke misplaced the paperwork, and is now in a weeks-long exchange with NS&I trying to trace the believes many people of her generation would have been bought Premium Bonds when they were children, but will have little idea how to trace their Richardson, deputy editor at consumer group Which? Money, said NS&I was not signed up to the government's own Tell Us Once service or its private equivalent, the Death Notification Service. The schemes help bereaved people by simplifying the process of notifying multiple organisations after a bank said its services "often required more individualised contact with executors" than the Tell Us Once scheme, but it wanted to be "as easy to use as possible... during difficult events". 'Computer says no' BBC Morning Live's resident money expert Iona Bain said NS&I needed to consider how it could improve."In theory, it shouldn't be the end of the world if you don't have the original certificate, perhaps because they've been mislaid or damaged," she said. "NS&I encourages people to come forward even if they only have basic details, as these can be matched up with what's in the system. "But the reality is more complicated. The majority of traces may be successful, but too many people have been left unhappy with what they feel is a 'computer says no' approach, even when they believe they have most of the details needed to find a match. "Whilst it can be administratively complex to track down historic money, NS&I needs to consider how it can improve this process so it's much less rigid, bureaucratic and frankly disappointing." Miss Lawrence has begun a petition calling for reform so names, dates of birth and address at time of purchase would be enough to locate an difficulties she has highlighted include:a lack of awareness about premium bonds paperwork when it is found among a relative's possessions after they have diedpeople who had paper bonds bought for them when they were minors not being aware they had to take steps to have the bonds transferred to them when they reach 16people finding bond certificates that have a holder's number, date and location of purchase, but the NS&I being unable to tell them to whom they belong How can you find your account? NS&I's tracing service can be contacted online, by post or over the phone, if people do not have their bond number or NS&I can also use MyLostAccount which is associated with UK Finance and the Building Societies Association, and can be used to trace old accounts with other providers as well as NS& with original paper bonds such as those purchased over the counter at the Post Office can register them online or call the helpline on 08085 007 007.A request can also be made for a trace by someone who is legally entitled to act on someone else's behalf, for example under a Power of Attorney or by an executor of a will. More about this storyThe Shared Data Unit makes data journalism available to news organisations across the media industry, as part of a partnership between the BBC and the News Media more about the Local News Partnerships here.
Daily Mail
24 minutes ago
- Daily Mail
Aussies still owed millions after major superannuation company collapses - and most will never get it back
The collapse of the First Guardian Master superannuation fund could spark major changes to how the government supports Australians who lose money due to bad financial advice. Currently, people who lose money when a financial company collapses can claim up to $150,000 through a government-run scheme called the Compensation Scheme of Last Resort. But there's a major issue: the scheme has limited funding because it's financed by certain finance companies via annual levies. Each year, the scheme can only pay out a total of $250 million across all claims. Additionally, there's a cap of just $20 million for each part of the finance industry, such as financial advice. This has led to serious shortfalls. For example, the scheme recently estimated it would need $70.1 million just to compensate victims of bad financial advice. That leaves many victims without the compensation they're owed, even though they did nothing wrong. Assistant Treasurer and Financial Services Minister Daniel Mulino has now ordered a review of the scheme to examine how it can be made fairer, especially for people who were misled by financial advisers, who make up most of the claims. Meanwhile, the liquidators of the First Guardian Master Fund have admitted they won't be able to repay everyone, despite its director, David Anderson, 46, owning a $9 million Melbourne mansion. The collapse has devastated 6,000 everyday Aussies like Canberra couple Simon and Annette Luck, who lost $340,000 - almost all their retirement savings. They had been planning a trip to the Netherlands and the UK to visit family. Now, they're considering selling their home and living in a caravan after following bad advice from a financial planner. 'Disheartened, dismayed and downright disappointed and let down,' Annette Luck told Daily Mail Australia. The First Guardian Master Fund was placed into liquidation in March after the Australian Securities and Investments Commission obtained a Federal Court order to freeze its assets. The liquidators, FTI Consulting, have now revealed that $446 million could conservatively be owed to retirement savers, after their superannuation was invested in dubious ventures, including $242 million sent overseas. 'The liquidators have preliminarily estimated that claims by unitholders on a cash invested basis that have not been redeemed approximate $446 million,' they said. 'Significant monies have been invested (or sent) offshore in foreign jurisdictions. 'Much has been invested in technology ventures, none of which appear to have yet been commercialised and are thus not generating an income.' The First Guardian Master Fund was placed into liquidation in March after the Australian Securities and Investments Commission obtained a Federal Court order to freeze its assets (pictured is the $9million mansion owned by director David Anderson) David Anderson 46, a director of the super fund and parent company Falcon Capital Limited, is accused of siphoning millions of dollars into his personal ANZ bank account. Before the fund collapsed, he had also bought a $9million Yarra River mansion in the upmarket Melbourne suburb of Hawthorn in 2020. Fellow director Simon Selimaj, 63, had a $548,000 Lamborghini Urus registered in his name. 'The vehicle was purchased in January 2023 by the company for $548,000 including on-road costs and was funded via a bank account controlled by the company,' the creditors' report said. The Lamborghini, which the liquidators have since seized, is estimated to now be worth $350,000 to $400,000, with Slattery Auctions taking possession of it. This new review is examining how to deal with compensation claims that collectively exceed a cap for a finance industry sub-sector.
