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The Financial Conduct Authority (FCA) is considering the option of a formal redress scheme to compensate consumers who may have overpaid on motor finance commission.
In a Treasury Select committee meeting FCA CEO Nikhil Rathi, said: “That is absolutely one of the options open to us under the law.
“There are a number of tests we have to complete if we are to go down that route and that is what we are gathering at the moment. It is one of the options we would need to assess on the basis of the information we receive,” he said.
On what the FCA expects to uncover he said: “It is unlikely from our work that we will find nothing to report. But I would also not like the Committee to think that this is on the same scale as PPI.
“We will have to assess what we do against all of our objectives, including ensuring the market functions well. 78% of households in the UK own a car and it is in all of their interest and out interest that we continue to have a functioning motor finance market in the UK.
He added that when the FCA has set up redress schemes in the past it wanted as much of the redress to go direct to consumers and not claims management firms.
“We have set out on our website and also sought to encourage consumers not to use claims management companies.”
When we have done schemes like this in the past we wanted as much of the redress to go direct to the consumer.
On the expected response to the FCA’s eventual findings, he said: “I would hazard a guess that when it comes to decision time, I would imagine nobody is going to be satisfied with us because you have very polarised views on some of these topics.”
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