Avoid using car finance claim firms, says financial watchdog
FCA warns that using a claim firm could see consumers lose up to 30 per cent of their winnings if car finance redress scheme is implemented
Consumers have been advised to steer clear of using car finance claim firms, as the UK’s top financial watchdog says they could be spending money unnecessarily.
The Financial Conduct Authority has begun setting out advice surrounding a possible redress scheme with regard to the ongoing car finance scandal which, according to experts, could see billions of pounds made available for potential claims.
However, with countless companies now popping up to assist potential claimants, the FCA is keen to remind motorists that in using one “they may end up paying for a service they do not need and having to pay up to 30 per cent in fees out of any award they may receive”.
Rather than utilise one of these paid services, consumers can submit timestamped complaints and claims themselves. Tools such as those on the MoneySavingExpert website can help people search for previous finance agreements, while the site also provides a template in order to draft a letter of complaint.
With the Supreme Court set to make its judgement next month in regard to whether “discretionary commission arrangements” (DCAs) were illegal in the first instance, the FCA is also advising finance firms on how they should calculate claims for disgruntled clients.
The FCA is keen for a redress scheme to strike a balance between being fair to consumers, but at the same time not disrupting the market by putting finance firms out of business. In its latest release, the FCA says that the latter scenario could “reduce competition and could make it more expensive for consumers to borrow money to buy a car in the future”.
Such a scheme will fall under one of two arrangements: ‘opt-in’ and ‘opt-out’. With the former – considered the most likely scenario – claimants would be required to notify their finance provider prior to a specified date if they wish to be considered for redress. ‘Opt-out’, on the other hand, would mean that everyone who is eligible will automatically be included, unless they contact their firm to be taken off the list.
Consumers can expect the FCA to announce within six weeks of the Court’s judgement in July as to whether a full redress scheme will be implemented, and how exactly it will operate.
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