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FCA to decide by Monday if it will impose motor finance redress scheme

ALN

The Financial Conduct Authority said it ‘will take time to digest the judgment’ by the Supreme Court regarding motor finance.

An FCA spokesperson said: ‘We welcome that the Supreme Court has clarified the law and are grateful to the Court for delivering the judgment after the market closed.’

‘It will take time to digest the judgment’, and ‘We want to bring greater certainty for consumers, firms and investors as quickly as possible,’ the regulator added.

The FCA said it will be ‘working through the weekend to analyse the judgment and determine our next steps.’

‘We said we would set out within 6 weeks whether we would consult on a redress scheme. But we want to provide clarity as quickly as possible.’

It said it will confirm whether ‘we will consult on a redress scheme before markets open on Monday.’

The FCA said its aim remains to ensure that consumers are ‘fairly compensated’ and that the motor finance market ‘works well’.

‘If we do decide to propose a redress scheme, we’ll consult widely. In designing a redress scheme, as we have previously said, we will balance principles including fairness, timeliness, and certainty.’

The FCA was commenting as Britain’s highest court on Friday partially overturned judgments that said controversial car loans were unlawful, in a boost for banks which had been bracing for billions of pounds in potential compensation claims.

The Supreme Court ruling closes the door to widespread compensation for millions of motorists.

It did, however, uphold one case, which allows the claimant to seek compensation on different grounds.

The Supreme Court decision mostly overturns judgments made by the Court of Appeal last year that ruled it was unlawful for car dealers to receive a commission on loans without sufficiently informing borrowers.

In some cases, these loans  available for 14 years from 2007  allowed car dealers to offer higher interest rates in return for a bigger commission from banks.

The ruling means that dealers have leeway when arranging loans, without requiring explicit consent from borrowers for terms that may benefit lenders.

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