The UK's All-Party Parliamentary Group on Fair Banking has questioned whether the Financial Conduct Authority’s proposed consumer redress model for historic car finance mis-selling provides adequate compensation, after its analysis showed that average payments under the scheme would fall significantly below levels seen through the courts or the Financial Ombudsman Service. According to the report, the FCA’s preferred “hybrid” methodology would produce an average payout of around £700 across all qualifying ...

Core Viewpoint - Santander has expressed concerns that the £11 billion car finance compensation scheme could negatively impact the economy by limiting credit availability for consumers [1][4]. Group 1: Santander's Position - Santander has urged the UK Chancellor to intervene and narrow the scope of the compensation scheme to limit the number of drivers eligible for redress [2]. - The CEO of Santander, Mike Regnier, stated that the current scheme could disproportionately harm the UK car industry and called for material changes to be considered by the government [3]. - Regnier highlighted that without changes, the scheme could lead to unintended consequences affecting the car finance market, credit supply, and ultimately jobs and economic growth [4]. Group 2: Compensation Scheme Details - The Financial Conduct Authority (FCA) announced that approximately 14.2 million drivers could be eligible for compensation, with payouts estimated at £700 each [5][7]. - The FCA's redress scheme is expected to cover about 44% of all motor finance agreements made between 2007 and 2024 [8]. - Santander had previously allocated £295 million to cover costs related to the compensation but now argues that the FCA's package exceeds the Supreme Court's ruling on the matter [6]. Group 3: Industry Response - Other banks, including Lloyds Bank, are also challenging the FCA's plans, expressing concerns that the scheme is too broad and may consider legal action [9][10]. - The FCA is currently conducting a consultation process regarding the scope of the redress scheme, which is set to launch in early 2026 [11].

Lloyds Banking Group has reserved an extra £800m ($1.06bn) to address potential costs arising from the latest car finance mis-selling scandal . Recently, the bank announced the incurring of additional charges. This decision follows a consultation paper issued by the Financial Conduct Authority (FCA) regarding a proposed industry-wide compensation scheme for motor finance customers, after a Supreme Court ruling earlier this year. The group, which operates a car finance provider, Black Horse, has evaluate ...

Lloyds Banking Group has conveyed the likelihood of incurring further charges due to the car finance mis-selling scandal. This follows the UK Financial Conduct Authority's (FCA) announcement that the total cost to banks could reach £8.2bn ($11bn) as a result of the scandal. The issue at hand stems from the way commissions were paid to motor dealerships, incentivising higher interest rates on millions of vehicle sales. According to regulatory and legal findings, these payments were not sufficiently trans ...