The UK’s financial regulator has come under pressure from members of the House of Lords to reconsider the length of time covered by its proposed compensation scheme for mis-sold car finance. The Financial Conduct Authority (FCA) had planned to cover loans dating back to 2007, but concerns have been raised about the practical challenges of processing such long periods of records.
Lord Michael Forsyth, chair of the House of Lords’ financial regulation committee, suggested that the redress scheme should be aligned with the six-year limit for claims under the 1974 Consumer Credit Act, rather than extending it over 18 years. This change, he argued, would simplify the process for both consumers and firms.
The FCA had estimated the scheme could cost lenders between £9bn and £18bn, a projection based on models used to calculate the extent of mis-selling, particularly through commissions paid to motor dealerships. The scandal revolves around these commissions, which resulted in higher interest rates for customers and were not sufficiently disclosed.
