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Motor finance firms want the UK government to force the Financial Conduct Authority to cut seven years off its compensation scheme for customers, the Sunday Times reported. The FCA’s scheme covers 18 years from 2007 to this year, when customers were not aware their dealer was receiving commission for arrange their finance. Over 14 million customers are eligible and could receive £700 each on average. The Sunday Times reported that sources close the the motor finance firms believe the FCA requires secondary legislation to allow it to enforce compensation between 2007 and 2014. The firms think Chancellor Rachel Reeves can intervene to block this legislation. The FCA denied that it would need new legislation for the compensation scheme. ‘We are satisfied we have the powers to implement the scheme we are consulting on,’ it said. ‘Complaints about agreements dating back to 2007 have been paused, under our powers, for nearly two years and now need to be dealt with fairly, one way or another, because liabilities exist, no matter what. Alternatives to a compensation scheme are likely to take longer and cost more.’ Last week, Lloyds Banking Group PLC Chief Executive Charlie Nunn told a committee in the House of Lords that the compensation scheme would ‘take away 20 years of profitability off the car finance industry’. On Thursday, FirstRand said it may raise a further provision to cover compensation for motorists in the UK motor finance market that has exceeded its expectations. In September, the Sandton, South Africa-based company made a R 2.7 billion pre-tax provision for the UK motor commission matter. This compares to R 3.0 billion raised in the prior year. The financial services group said on Thursday potentially higher provision is due to the increased likelihood of a higher number of pre-2021 motor finance agreements, and the FCA’s proposed methodology for the calculation of redress. The FCA has extended the consultation period to December 12 from November 18. The Treasury said: ‘The independent Financial Conduct Authority has set out its consultation and it‘s vital that all stakeholders take part. We want to see this issue resolved in an efficient and orderly way that provides certainty for consumers and firms.’ Copyright 2025 Alliance News Ltd. All Rights Reserved.
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