UK to lift pause on motor finance complaint handling in May 2026 (updated)
03/12/2025 07:38
FCA could adjust and refine redress proposal, CEO says Feedback from consultation has been 'lively' Will announce if plan to go ahead by end of March Proposed plan could cost industry about 11 billion pounds Recasts with CEO Rathi quotes By Phoebe Seers and Kirstin Ridley LONDON, Dec 3 (Reuters) - Britain's Financial Conduct Authority (FCA) could adjust and refine a proposal for a multi-billion-pound motor finance redress package if it sees convincing, evidence-based feedback during a consultation, its chief executive said on Wednesday. FCA chief Nikhil Rathi told the FT Global Banking Summit that the markets watchdog had received "lively" responses to its proposals for a compensation scheme it has estimated could cost the industry around 11 billion pounds ($14.8 billion). "There's lively feedback from all sides of this debate ... and we're listening really, really carefully to it and where there's evidence-based feedback that is convincing ... I'm sure we will adjust and refine," Rathi told the three-day London conference. FCA TO DECIDE BY END OF MARCH The consultation on proposals for one of Britain's costliest redress packages, which has drawn anger from the industry, closes on December 12. The FCA said it would decide by the end of March whether to press ahead with the plan. Meanwhile, some in the industry, which includes Lloyds LLOY.L, Santander SAN.MC, Close Brothers CBRO.L, Bank of Ireland BIRG.I, Barclays BARC.L, FirstRand FSRJ.J and the finance arms of car manufacturers, have hiked financial provisions. The FCA wants the industry to stump up for unfair and inadequately disclosed commissions paid by lenders to motor dealerships and contractual ties between lenders and dealerships that it says incentivised brokers to raise interest rates on car loans over a 17-year period. Some lenders, however, say the proposals are inconsistent with a recent court judgement and have questioned whether the regulator's methodology reflects actual losses to customers. "Yes, there's a discussion around the quantum of redress," Rathi said. "But more than anything, investors want certainty." The FCA earlier on Wednesday brought forward the date when the industry must deal with motorists' complaints to May 31, 2026, two months earlier than initially proposed. Ending a pause in complaint handling earlier is designed to ensure motorists get speedier responses if their cases do not meet the criteria for a redress plan, if a plan is implemented with a more limited scope or if it is scrapped, the FCA said. (Reporting by Phoebe Seers and Kirstin Ridley, additional reporting by Raechel Thankam Job in Bengaluru, editing by Ed Osmond) ((Kirstin.ridley@thomsonreuters.com; +44 (0) 207 513 5666;))