FCA proposes compensation scheme for unfair motor finance agreements

Core Viewpoint - The UK's Financial Conduct Authority (FCA) has proposed a compensation scheme for approximately 14 million unfair motor finance agreements, potentially disbursing £8.2 billion ($11 billion) to affected consumers due to nondisclosure of critical information [1][2]. Group 1: Compensation Scheme Details - The proposed scheme aims to provide average payouts of about £700 per affected agreement [1]. - Eligibility includes motor finance agreements from 6 April 2007 to 1 November 2024, where a commission was paid by the lender to the broker [3]. - The scheme is designed to be a no-cost solution for consumers and more economical for companies compared to court processes [2]. Group 2: Consumer Participation and Process - Research indicates that nearly half of eligible consumers have not filed claims due to unclear eligibility criteria, while almost a quarter are uncertain about the compensation amount [2]. - Consumers are advised to lodge complaints directly with their lenders, using resources provided by the FCA, without needing claims management companies or lawyers [4]. - Once the scheme is active, lenders will contact consumers who have not complained within six months, offering a review of their cases [4][5].