Latest news with #PaymentProtectionInsurance
Mint
7 days ago
- Automotive
- Mint
FCA Head Says Car Loan Claims to Be Lower Than PPI: Sunday Times
(Bloomberg) -- Banks will pay out 'substantially less' compensation for hidden commission in car finance loans than they did during the Payment Protection Insurance scandal, according to Nikhil Rathi, chief executive officer of Britain's Financial Conduct Authority. 'We would expect any outcome — if we are to move forward with an industrywide compensation scheme — to be substantially less than the PPI episode,' Rathi said in an interview with the Sunday Times. Compensation for PPI claims, where lenders sold insurance borrowers didn't need, cost the banks at least £35 billion ($46.5 billion). Rathi's comments come after a Supreme Court judgment on Friday overturned prior rulings that lenders feared would force them to pay huge amounts in compensation for many used car loans they had sold. The top court said car dealers can act in their commercial interests and dismissed most of the arguments that dealers selling loans for lenders must obtain consumers' informed consent to charge commission. Meetings are being held on Sunday afternoon between the FCA, investors and analysts, according to an FCA spokesperson. The regulator said it would confirm before markets open on Monday whether it would go ahead with its plans to propose a redress scheme for consumers. Professional services firm BDO said the judgment could still result in redress of between £5 billion and £13 billion, or more, with clarity needed from the FCA about its next steps. Before Friday's ruling, analysts had estimated that the total bill for compensation could top £30 billion. More stories like this are available on
CNBC
01-08-2025
- Automotive
- CNBC
Top UK court to rule on car finance mega-scandal — with billions at stake
The U.K.'s Supreme Court is poised to deliver a long-awaited judgment on the country's multi-billion-pound car finance scandal , one which could have major ramifications across the British economy. Britain's top court is set to hand down its ruling on motor finance commissions at 4:35 p.m. London time (11:35 a.m. ET) on Friday, a few minutes after European markets close. The car finance industry has been in disarray since the U.K.'s Court of Appeal ruled in October last year that it was unlawful for car dealers to receive bonuses from banks providing motor finance without getting the customer's informed consent. The landmark judgement caught many in the industry off guard at the time — and opened up the prospect of a massive redress scheme to compensate consumers. The crisis has drawn comparisons to Britain's Payment Protection Insurance (PPI) scandal, which was estimated to have cost lenders more than £50 billion ($66.1 billion). U.K.-based lender Close Brothers and South Africa's FirstRand have sought to overturn the Court of Appeal's decision. It puts the forthcoming Supreme Court ruling in sharp focus, with millions of consumers poised to claim compensation from the banks involved. For its part, the U.K. government is thought to be closely monitoring the decision, amid fears that a judgement calling for billions of pounds in redress payments could significantly disrupt the car market. Potential costs Analysts at RBC Capital Markets recently slashed their estimates for how much the scandal could end up costing lenders. "We expect that the Court will find that the banks were liable under statute, focussing on egregious discretionary commissions, but will clear them of liability in equity and under tort," Benjamin Toms, equity analyst at RBC Capital Markets, said in a research note published Monday. "We believe this is an ideal way for this issue to be handed back to the FCA to set up a softer redress scheme," Toms said, referring to Britain's Financial Conduct Authority. As a result, analysts at RBC Capital Markets reduced their expectations for the estimated cumulative impact from motor finance redress by around 30%. They now anticipate a total sector impact of £11 billion, of which £4 billion for banks and £7 billion for non-banks. Alongside Close Brothers, rating agency Fitch previously flagged Bank of Ireland UK, Barclays, Investec, Lloyds and Santander UK as lenders that have been "significantly involved" in motor finance lending. Redress scheme Brian Nimmo, head of redress at financial services consultancy Broadstone, said the Supreme Court's forthcoming judgment could kickstart one of the country's largest-ever mass redress schemes. "The ruling should give clarity on whether discretionary commission was unlawful and also what the ramifications could be for other markets with elements of hidden commission," Nimmo said. "The FCA has already set out some of the key decisions it will make around the potential implementation of a redress scheme that would be highly complex in seeking to balance fairness for consumers and the integrity of the motor finance market," he added. The FCA, which is considering an industry-wide redress scheme, has said it will confirm whether to issue compensation to consumers within six weeks of the Friday ruling.
Business Wire
25-07-2025
- Business
- Business Wire
Genworth Issues Statement on Favorable Ruling for AXA in UK Payment Protection Insurance Case
RICHMOND, Va.--(BUSINESS WIRE)--Genworth Financial, Inc. (NYSE: GNW) today issued a statement in response to a UK High Court judgment in favor of AXA in the legal proceedings against Santander companies related to liabilities associated with the historic mis-selling of Payment Protection Insurance (PPI) policies. At issue were losses incurred from mis-selling complaints for PPI underwritten by two companies that AXA acquired from Genworth in 2015. The policies were sold by a company acquired by Santander in 2009. The judgment finds Santander liable for AXA's losses resulting from Santander's mis-selling. At a hearing in London today, the Judge awarded AXA damages, interest, and costs of approximately £680 million, or $911 million, using a £1/$1.34 exchange rate. Under prior agreements between Genworth and AXA, Genworth is entitled to share in funds that AXA recovers from third parties related to the mis-selling losses. If the judgment is paid in full and appeals, if any, are favorably resolved, Genworth would expect at that time to recover approximately $750 million, depending upon the applicable exchange rate at that time. As previously shared, any recoveries have not been factored into Genworth's capital allocation plans. Genworth plans to deploy any recoveries in line with our stated capital allocation priorities: investing in growth through CareScout, returning cash to shareholders through our buyback program, and opportunistically paying down debt. Cautionary Note Regarding Forward-Looking Statements This press release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by words such as expects, intends, anticipates, plans, believes, seeks, estimates, will or words of similar meaning including, but are not limited to, statements relating to any potential future judgment, recovery and/or payment amounts in connection with the AXA S.A. and Santander Cards UK Limited litigation (AXA Litigation), Genworth's planned use of proceeds from any recovery in connection with the AXA Litigation, including share repurchases, debt repurchases and investments in new businesses, and the future financial condition and liquidity of Genworth. Forward-looking statements are based on management's current expectations and assumptions, which are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Actual outcomes and results may differ materially from those in the forward-looking statements based on the actual ultimate outcome of the AXA Litigation, including without limitation the resolution of any appeals, changes to future capital allocation decisions, and other factors and risks, including those listed in the risk factor section of Genworth's Annual Report on Form 10-K, filed with the U.S. Securities and Exchange Commission (SEC) on February 28, 2025. Genworth undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise. About Genworth Financial Genworth Financial, Inc ('Genworth') (NYSE: GNW) is a Fortune 1000 company focused on empowering families to navigate the aging journey with confidence, now and in the future. Headquartered in Richmond, Virginia, Genworth and its CareScout businesses provide guidance, products, and services that help people understand their caregiving options and fund their long-term care needs. Genworth is also the parent company and majority-owner of publicly traded Enact Holdings, Inc. (Nasdaq: ACT), a leading U.S. mortgage insurance provider.
Daily Mirror
05-06-2025
- Automotive
- Daily Mirror
Major car finance compensation update issued today for millions of UK drivers
Earlier this year, the FCA confirmed it was consulting on a redress scheme and aims to announce the next steps for complaints within six weeks of the Supreme Court's decision A major update has been issued for millions of drivers who are waiting to see if they are due compensation over car finance mis-selling. The Financial Conduct Authority (FCA) is currently investigating whether drivers were unknowingly overcharged when they took out car loans. Specifically, the case is looking into car finance deals taken out before January 28, 2021, which contained 'discretionary commission arrangements'. This allowed car dealers to adjust the interest offered to customers without informing them, to increase their commission. The FCA banned this practice in 2021. However, last year, the independent complaints arbitrator, the Financial Ombudsman Service (FOS), said it had heard from "more than 10,000" people who feared they had been overcharged. The scandal is being compared to the infamous Payment Protection Insurance (PPI) scandal from 2008. The financial watchdog is currently waiting on a Supreme Court Verdict, which will decide whether to uphold a previous case that ruled several car finance schemes unlawful. If upheld, millions of drivers across the UK would be eligible for compensation. The outcome is set to be confirmed in July this year. Earlier this year, the FCA confirmed it was consulting on a redress scheme and aims to announce the next steps for complaints within six weeks of the Supreme Court's decision. In an update shared today, the FCA said it wanted to avoid the use of claims management companies in any compensation scheme for mis-sold car loans. Claims companies apply for compensation on behalf of individuals; however, they take a cut of the payout for their work. This means consumers do not keep all of the compensation they are owed. The 2008 PPI scandal saw a vast number of claims companies push their services onto affected consumers. According to a report from Reuters, the regulator said it aimed to make any redress scheme "comprehensive, swift, and easy for consumers to take part in" - without using claims management companies. The FCA is working on a potential redress scheme so it can move quickly if needed, but it hasn't decided whether consumers might have to opt into any scheme or would be automatically included unless they opt out. According to some analysts, the car loans scandal is projected to cost lenders, including Santander UK, Close Brothers, Barclays, and Lloyds Banking Group, over £40billion. Lloyds Banking Group, Close Brothers, and Santander have together already set aside more than £1.5billion to cover potential claims. However, the FCA said today that these estimates were too high. They said: "We've seen a range of redress rates suggested. This includes some highly speculative figures by some CMCs and law firms." Join Money Saving Club's specialist topics For all you savvy savers and bargain hunters out there, there's a golden opportunity to stretch your pounds further. The Money Saving Club newsletter, a favourite among thousands who thrive on catching the best deals, is stepping up its game. Simply follow the link and select one or more of the following topics to get all the latest deals and advice on: Travel; Property; Pets, family and home; Personal finance; Shopping and discounts; Utilities. Martin Lewis has been campaigning on this issue over the last year and has previously urged anyone who thinks they may have been affected to put in a complaint now, in case a cut-off date for complaints is introduced. You should submit your complaint directly to the lender that provided the car finance - not the broker or car dealer where you got your vehicle from. You could end up being eligible for compensation if you weren't told about commission and may have paid too much for your car finance, or if you had a car finance deal that contained a DCA. MSE has a free car finance tool to help you complain. Car finance lenders have until December 4, 2025, to respond to complaints.
Daily Mirror
28-04-2025
- Automotive
- Daily Mirror
2.8 million Brits already seeking payouts from car finance scandal - are you owed cash?
Millions of Brits have already begun to find out if they're owed thousands of pounds having wrongly been mis-sold car finance. This year motorists across the country could be in for a major windfall, with thousands of pounds potentially owed to them due to a car finance mis-selling scandal that's drawing comparisons to the infamous Payment Protection Insurance fiasco. Many drivers have been left out of pocket for years. What's more, many of them don't even realise that they're owed cash. As a court case connected to the scandal nears its end, companies such as My Claim Group (MCG) can help you find out if you can claim. This article contains affiliate links, we will receive a commission on any sales we generate from it. Learn more Find out if you are owed £1,000s without spending a penny You can start a claim with My Claim Group to find out if you are due a big payout. It's easy and takes just minutes to complete. My Claim Group Click here to find out if you're owed money At the heart of the scandal were undisclosed "secret" commissions paid by lenders to car dealerships, which have led customers to unwittingly sign up for finance agreements with jacked-up interest rates. The full scale of the scandal has only recently emerged, with a significant UK Supreme Court judgement expected later in 2025. This decision will determine the extent of the repayments car finance lenders will need to make to their customers. Find out if you're owed thousands of pounds today Can I claim back cash? If you purchased a vehicle through Personal Contract Purchase (PCP) or Hire Purchase (HP) before 28 January 2021, you might be entitled to claim back thousands. My Claim Group is on hand to assist those affected, or who suspect they might be, in reclaiming their cash. You can check how much you could be owed via My Claim Group. The company suggests that as many as 40% of HP and PCP deals from 2007 to 2021 may have involved these covert commissions, indicating that you may have overpaid and could now be eligible for compensation. MCG has already supported vehicle owners in lodging claims that could average around £4,000 each, with 1.2 million claims processed so far. What's the story behind the scandal? Prior to the regulatory shake-up in 2021, a significant number of car finance deals were built on "discretionary commission arrangements." These setups allowed car dealers the freedom to dictate the interest rates of their offered finance deals. The juicier the interest rate, the fatter the commission pocketed by the dealer. This arrangement led to an undeniable conflict of interest. Dealers were economically encouraged to flog loans at inflated interest rates to unsuspecting customers, chasing a plumper payday, regardless of whether such deals were the best fit for the consumer. This often went down without the customer being any the wiser to the commission model steering their terms. Consequently, many consumers were saddled with pricier loans than necessary, oblivious to the fact that their loan terms were skewed by the dealer's eagerness to swell their own profits. When did the dodgy dealings end? The Financial Conduct Authority (FCA) introduced a ban on discretionary commission models in January 2021. This move was intended to hike up transparency and offer greater protection to consumers. It emerged that these questionable lending practices had been going on since as early as 2007, leading to a sweeping probe into the history of the lenders' methods. A pivotal moment occurred in October 2024 when the Court of Appeal declared that the non-disclosure of commissions on car loans was illegal. This ruling broadened the scope for mis-selling claims, establishing a precedent that any hidden commission arrangements could now be a valid ground for consumer compensation. This judgement triggered a wave of complaints, with the Financial Ombudsman Service recording an all-time high of 18,658 new car finance cases in the last quarter of 2024. What's the current situation? The scandal led to government intervention. In January 2025, UK Chancellor Rachel Reeves stepped in to intervene in the Supreme Court case to shield lenders from potential multibillion-pound payouts, voicing concerns about the wider economic implications and the possible impact on consumers' access to car loans. At the same time, claims management firms like My Claim Group are urging consumers to lodge complaints. The Supreme Court is currently examining a crucial appeal by car loan providers, following earlier judgements that sided with consumers. The FCA has put a temporary halt on the complaints process until the court's verdict, expected later this year. The result of this appeal will play a significant role in determining lenders' liability. What can I do? If you suspect you've been affected by the scandal, head over to the My Claim Group website for more information and start the simple process to find out if you're due a refund.
