Reported in our previous article a further staggering statistic today reported in The Times Today that has confirmed the looming investigation by the Financial Conduct Authority (FCA) could lead to a potential compensation payout totalling £10bn by the Banks.
The potential misconduct related to car finance loans has raised estimates of a substantial compensation bill for banks, particularly Lloyds Banking Group. The inquiry focuses on whether borrowers, predating January 2021, faced higher interest rates in exchange for increased commissions to car dealers.Contact Us Now To Claim
Millions of Car Owners Could be Affected
The discretionary commission model, allowing dealers to set borrower interest rates, was applied to nearly 40% of car finance lending between 2013 and 2016. Banks are expected to be affected. The FCA anticipates a 37-week investigation duration, aiming to conclude with decisive steps. The Guardian has stated that millions of car owners could have been mis-sold a car loan entitling them to compensation payments if the financial watchdog following their investigation concluded that had been unfairly charged inflated prices for loans on new and secondhand cars
Over 16,000 complaints have been registered with the Financial Ombudsman Service since September 2022, some by claims companies suggesting a mis-selling scandal akin to PPI. Although Lloyds, facing potential compensation, had previously paid over £20 billion for PPI mis-selling, analysts estimate a lower bill for car finance mis-selling, focusing solely on the extra interest paid rather than the entire finance cost. The Financial Leasing Association reports that about 93% of new cars are bought on finance, making this investigation of considerable significance within the financial sector.
The mis-selling of car dealer finance we reported on the 12 January that compensation has already been awarded to borrowers of Barclays and Black Horse Finance, both subsidiaries of Lloyds Banking Group. In these cases, consumers found themselves paying higher interest rates due to dealers receiving elevated commissions. The FOS ruled in favour of the consumers, directing Barclays and Black Horse to compensate one with £1,593 and the other with £1,299.
Further it is reported by the Telegraph that FOS had banned the “discretionary commission” incentives in 2021 after finding that individual buyers were paying up to £1,100 over the odds on a £10,000, four-year finance package. More than 10,000 complaints have been made to the FOS by drivers who believe they were overcharged.
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Secrecy and commission being paid to sellers of loans. We have all heard of this before, notably PPI mis-selling. The scandals appear to keep on going on and on. Whilst there is a free scheme you can use, if you don’t have the time or inclination to deal with all the paper work and allegations we can assist you all under our NO WIN, NO FEE, expert service. We have over 15 years of experience in financial mis-sellingand have recovered £Millions on behalf of our clients.Contact Us Now To Claim