Motorists are being warned to remain vigilant against fraudulent schemes perpetrated by individuals impersonating car finance lenders and offering bogus compensation, according to a recent alert.
This warning from the Financial Conduct Authority (FCA) follows its announcement regarding the potential establishment of a compensation program for consumers who were mis-sold car finance agreements.
Earlier this month, the Supreme Court issued a ruling clarifying that, in many instances, commissions paid by lenders to car dealerships for arranging financing were lawful.
However, the court’s decision left open the possibility of claims for consumers who may have been subjected to excessive commission fees.
Notably, some dealerships received higher commission rates from lenders for securing loans with higher interest rates for customers, a practice that has been prohibited since 2021.
In response to the Supreme Court ruling, the FCA announced its intention to consult on the creation of a compensation scheme for eligible consumers, estimating that most qualifying individuals will receive less than £950.
The consultation process is expected to last approximately six weeks, and if approved, the FCA anticipates commencing payments next year.
Following the FCA’s compensation announcement, the regulatory body has reported instances of scammers contacting individuals, falsely offering non-existent compensation, and requesting personal information.
“We’re aware of scammers calling people and posing as car finance lenders, offering fake compensation and asking for personal details,” stated Nisha Arora, director of special projects at the FCA.
“There is no compensation scheme in place yet. If anyone receives a call like this, hang up immediately and do not share any information.”
The FCA emphasized that it would never request bank account PINs or passwords and urged individuals to report any suspicious calls or text messages to Ofcom.
The FCA has also previously cautioned consumers against engaging with claims management companies (CMCs) or other firms before a decision is made on a centralized claims scheme.
In a joint statement with the Solicitors Regulation Authority, the FCA highlighted that consumers could potentially forfeit up to 30% of any compensation awarded in fees to CMCs or law firms.
The FCA has asserted that the purpose of a centralized redress scheme is to streamline the compensation process for consumers, eliminating the need for assistance from CMCs or law firms.
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