Context
The FCA has issued a press release commenting on their expectations for firms making car finance settlement offers.
Key points to note and next actions
- The FCA has noted there is strong demand for early compensation with 89% of car finance customers who have complained (or are considering doing so) wanting the option to receive compensation immediately, rather than wait for the legal challenges to conclude. 86% are happy to receive an offer, and 61% would accept an offer in line with the FCA’s compensation scheme.
- Customers have advised that they want some degree of financial certainty around the scheme, with 77% stating that receiving compensation sooner would make a significant or fair amount of difference to their financial situation.
- The FCA supports lenders who may offer compensation whilst the legal challenges continue, provided customers do not receive less than the scheme provides for. Barclays Premier Finance has confirmed it will make offers to some eligible customers.
- Customers must understand the implications – accepting an offer means keeping the agreed amount, even if a later legal ruling would have resulted in less compensation. Equally, customers cannot claim more if the ruling would have increased their entitlement. Customers can reject an offer and remain within the scheme, but cannot refer settlement offers to the Financial Ombudsman Service.
- The FCA reminds that there is no obligation to accept an early offer and not all lenders will make them. The FCA requires lenders to product a factsheet explaining the terms and will publish updates on participating firms. Customers who have not yet complained should contact their lender directly, and as the FCA has already stated should avoid claims management companies who may charge up to 36% of any compensation.