Launch of ‘Car Finance Scandal: Assessing Redress’

On Monday 3 November, the APPG on Fair Banking and hosted a launch event, sponsored by Courmacs Legal, for a new report Car Finance Scandal: Assessing Redress, which examines the FCA’s proposed car finance redress scheme and highlights its potential implications for consumers under the FCA’s current model. The event featured contributions from Dame Siobhain McDonagh MP and Darren Smith, Managing Director at Courmacs Legal.

Dame Siobhain McDonagh discussed the importance of a redress scheme that addresses the needs of consumers, particularly those who are financially vulnerable. She noted it has now been more than eight years since the FCA first announced a formal review of the car finance market, demonstrating that it is not fit for purpose and an update is long overdue. She also questioned whether the FCA’s proposals offer an adequate deterrent to future mis-selling practices and whether they will help to rebuild public confidence in the banking sector.

Darren Smith echoed the damage caused to consumer confidence and trust in the car finance market as well as the direct financial burden on individuals. He highlighted that the constituency-level data in the report demonstrates the widespread and systemic nature of the problem. He explained that under the FCA’s scheme, average compensation for mis-sold loans could be around £518 (for consumers using DCAs), compared with approximately £1,500 through the courts – a difference causing lenders to save around £4.4bn.

The report has already attracted media attention including The Guardian, City AM, and GB news, prompting discussion about the effectiveness of the current proposals and the need for a fair, transparent approach to redress.