Lenders face £30bn bill over car finance scandal as city watchdog opens door to flood of claims
The City Watchdog has opened the door to a flood of claims from car customers amid a growing car finance scandal that could cost lenders as much as £30 billion.
The Financial Conduct Authority (FCA) said many customers who took out a loan through a dealer may be owed compensation and has extended the time firms have to respond to complaints.
“Anyone who is unhappy with their car finance deal should make a complaint,” the FCA said. It came as lenders Close Brothers and Investec said they were facing uncertainty over the impact of the scandal.
New claims: The FCA said many customers who took out a car loan through a dealer may be owed compensation and has extended the time companies have to respond to complaints
Santander UK has set aside £295 million to cover the potential costs. Lloyds Banking Group has made a provision of £450 million.
Credit rating agency Moody’s has estimated that the total cost to the sector could be as high as £30 billion, after the Court of Appeal said it was unlawful for dealers to receive a commission from banks without customers’ informed consent.
The lenders involved plan to appeal to the Supreme Court. Close Brothers suspended UK car finance loans on October 25 and partially restored them on November 2.
Investec has set aside £30 million as the outcome of the appeal and FCA guidelines would affect the final bill.
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