May 30, 2024
Finance

Car finance firms told to set aside enough compensation cash for drivers’ bills amid new crackdown


THE City watchdog has told car finance firms they must make sure they have enough cash put aside to cover drivers’ compensation bills.

The warning comes after the regulator launched a crackdown on hidden commission which could result in companies coughing up thousands of pounds.

The FCA has told car finance firms they must make sure they have enough cash put aside to cover drivers’ compensation bills

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The FCA has told car finance firms they must make sure they have enough cash put aside to cover drivers’ compensation billsCredit: PA

The Financial Conduct Authority launched a probe in January into unfair commissions on motor finance deals.

As many as four in ten had hidden “discretionary commission arrangements” where firms allowed their brokers and car dealers to hike interest on loans.

The secret practice meant that motorists were unaware they were being ripped off before the FCA banned it in 2021.

The FCA said yesterday motor finance companies had to “maintain adequate resources at all times”.

It has fuelled speculation that lenders will face hefty compo bills, with consumer champion Martin Lewis reckoning it could run to £50billion.

The firms involved include Barclays, BMW Financial Services, Black Horse and Santander.

Lloyds, one of the UK’s biggest motor finance providers through Black Horse, said in February that it was putting £450million aside to cover the costs of potential outcomes to the inquiry.

Martin Lewis warns EVERYONE who owns a van, car or motorbike they could be owed £1,000s

BP ‘BUY-UP’ LIFT

SHARES in BP rose yesterday after reports Abu Dhabi’s state-owned oil firm had explored a takeover bid.

ADNOC is said to have considered buying or a hefty stake before walking away from talks after deciding it was “not the right fit”.

Political considerations also played a role.

BP shares rose 3.5 per cent.

HOME BAGGIN’

HOME BARGAINS has paid its Morris family owners a £35million dividend, meaning they have had £105million in rewards since Covid.

The discount retailer grew its profits by 13 per cent to £256.6million last year.

Billionaire Tom Morris continues to own 90 per cent, with the remainder in family trust.



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