Overview

• FCA chief Nikhil Rathi told MPs a public consultation on the industry-wide scheme will launch by early October, with compensation targeted to begin next year.
• The proposed scope covers agreements from 2007 to around 2020, focusing on PCP and hire purchase deals and the use of discretionary commission arrangements that were banned in January 2021.
• Discretionary commission arrangements applied to roughly 40% of deals, allowing brokers to vary interest rates to increase commissions without borrowers being properly informed.
• The Supreme Court’s ruling last month narrowed undisclosed commission claims, yet the FCA says evidence of unfair lender–consumer relationships warrants a sector-wide redress framework.
• The regulator expects typical awards in the hundreds rather than thousands of pounds and has intervened in about 400 claims firm promotions, including 171 since the judgment, while cautioning consumers against using paid claims handlers.