Tom Gordon MP calls for swift compensation for those mis-sold car finance

Tom Gordon, Liberal Democrat MP for Harrogate and Knaresborough, has urged the Government and the Financial Conduct Authority (FCA) to work together to swiftly deliver a compensation scheme that will see lenders who mis-sold car finance deals “make up for their actions”. This comes after the financial watchdog announced a consultation this week on a possible compensation scheme.

The news comes after a landmark Supreme Court ruling opened the possibility of compensation for particularly large car finance commissions, which judges said were unfair. Car buyers may also be entitled to payouts if their dealer had secretly hiked the interest rate on their car loan through what is known as a “discretionary commission arrangement” (DCA).

This week the financial watchdog the Financial Conduct Authority said it will launch a consultation in early October to determine what a potential compensation scheme might look like. It said that “If the compensation scheme goes ahead, the first payments should be made in 2026.”

The UK’s largest car finance lender, Lloyds Bank, had previously set aside £1.2bn to cover compensation claims.

Tom Gordon, Liberal Democrat MP for Harrogate and Knaresborough, said: 

“Last week’s Supreme Court ruling is a victory for consumers, paving the way for billions of pounds in compensation to those unfairly ripped off.

“For too long, lenders had been able to get away with charging eye-watering and unfair commission on car finance deals. I hope that the Government and the financial watchdog will now work together so that those affected can get the compensation they are owed as quickly as possible.

“It’s only fair that big finance firms make up for their actions.”

ENDS

Notes to editor:

The FCA’s announcement on its consultation on a compensation scheme can be found here: https://www.fca.org.uk/news/press-releases/fca-consult-motor-finance-compensation-scheme