FCA faces four lawsuits over £9.1bn compensation scheme for car loan victims
Summary
The UK’s Financial Conduct Authority (FCA) faces four legal challenges over its £9.1 billion plan to compensate people affected by a motor finance scandal. The FCA says it will defend the plan, which aims to quickly pay back borrowers who were overcharged on car loans, but the lawsuits could delay payments.Key Facts
- The FCA set up a £9.1 billion compensation scheme for victims of mis-sold car loans.
- About £7.5 billion will go directly to borrowers, with £1.6 billion covering administrative costs.
- Four legal challenges have been filed, including one by the consumer group Consumer Voice and lenders Volkswagen, Mercedes-Benz, and Crédit Agricole.
- The FCA plans to pay an average of £830 per mis-sold loan.
- The scandal involves overcharging drivers due to commission deals between car dealers and lenders from 2007 to 2024.
- The FCA believes the scheme is the fastest and simplest way to help consumers and fix the issue.
- Legal challenges might delay the start of payouts, which were expected to begin in the summer.
- The FCA is talking with lenders and consumer groups to consider next steps, including backup plans.
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