Scammers offering fake compensation for car loans
The Financial Conduct Authority (FCA) said scammers were calling people and offering 'fake compensation in exchange for personal details such as their name, address, date of birth and bank information'.
Millions of consumers who bought cars with motor finance could be entitled to payouts of almost £950 after the regulator said this month that it would consult on creating a redress scheme that could cost lenders between £9 billion and £18 billion, a figure substantially lower than had been feared by the motor finance industry, but which would still represent one of the largest UK compensation exercises.
The regulator noted that the redress scheme was not yet in place and that lenders were not contacting customers yet. It said that people receiving calls about compensation should hang up.
In 2021 the FCA banned car dealers from adjusting the rate of interest they offered to buyers in return for higher commission from car finance firms. It had wanted to start a compensation scheme but put this on hold while cases brought by individuals went through the courts. Eventually the Court of Appeal backed consumers, prompting speculation that the industry was facing a bill of up to £40 billion.
The Supreme Court overturned central elements of the earlier judgment, however, in a victory for the motor finance industry. The authority is consulting on a compensation scheme in the context of the Supreme Court judgment.
The regulator's guidance that payouts are likely to be less than £950 per car finance loan and that they do not need to use a claims management company has been a blow to the claims industry, which had told people that claims could be in the order of £4,000.
• The obscure firms behind frenzy in car loan claims
Members of the House of Lords have urged the FCA to further reduce the scope of compensation by rethinking its plan for the redress scheme to cover loans written as far back as 2007.
The House of Lords financial regulation committee has said that a 'more appropriate' timeframe for the scheme could align with a six-year deadline for claims to be brought before a civil court.
Nisha Arora, director of special projects at the FCA, said: 'We're aware of scammers calling people and posing as car finance lenders, offering fake compensation and asking for personal details. There is no compensation scheme in place yet. If anyone receives a call like this, hang up immediately and do not share any information.'
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