The financial scandal brewing in the UK’s motor finance sector could rival the infamous £50 billion Payment Protection Insurance (PPI) consumer scandal, the Financial Conduct Authority’s (FCA) top legal chief has conceded.
Stephen Braviner Roman, the FCA’s general counsel and executive director in charge of legal affairs, told the influential panel of lawmakers on December 10 that the fallout from hidden commissions on car loans could result in a much bigger industry-wide bill than previously thought.
The FCA had already been investigating “discretionary commission arrangements” (DCA), where buyers could have been overcharged when lenders allowed their intermediaries such as car dealers to increase the amount of car loan payments. A Court of Appeal ruling in late October then upheld claims over hidden commissions, significantly broadening the range of potential compensation. Lower courts have been requested to pause many cases pending an expected Supreme Court ruling that could clarify the legal framework.
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