Millions of hard-pressed motorists could be due compensation in the next year following the mis-selling of car loans. This compensation system comes in direct response to an order by the UK’s supreme court. It takes on issues with dealer compensation plans between lenders and car dealers, as well as taking on misleading information from car dealers to car buyers.
The commission mis-selling of car loans largely revolves around something called discretionary commission arrangements. Under these agreements, dealers are compensated by lenders through a dealer markup on the interest rates the lenders charge their customers. This practice has resulted in more than 14.6 million of these agreements being flagged for potential victim compensation. Most of these agreements led to predatory contracts for purchasers, as commissions to dealers under these agreements had been unreasonably high. Buyers who were not provided with accurate information regarding the best finance deals will be eligible for compensation.
The financial regulator’s new plans are based on those former experiences especially the Payment Protection Insurance (PPI) mis-selling scandal. In the PPI scandal, nearly 34 million consumers were reimbursed, receiving an average of nearly £1,000 each. Government car loans mis-selling scandal compensation scheme about to help millions of drivers. This compensation is going to reach far fewer people than those harmed by the PPI scandal.
To promote understanding of the compensation scheme, the regulator used creative approaches seen during the PPI crisis. Perhaps the most eye-catching approach was introducing a robotic head and voice of action star and former California Gov. Yet, some of these firms that have been complicit in the mis-selling of car loans have not been easy-going with the regulator’s push.
The financial regulator is working diligently to finalize the compensation scheme by next year, ensuring that affected motorists receive the restitution they deserve. While the specifics are still being worked out, tens of millions of affected drivers are eagerly waiting to learn more about their eligibility and how compensation will be distributed.
