Drivers have been given an update from the nation's financial regulator on the future of the car finance scandal compensation scheme, which is expected to launch in the coming months.
The Financial Conduct Authority (FCA) has been analysing over 1,000 responses to proposals laid out in relation to a redress scheme for motorists treated unfairly by lenders.
It explained that it would look to make several changes to the proposed redress scheme based on feedback received, with final rules set to be confirmed in "late March".
While final decisions on the scheme have not yet been finalised, the FCA said the announcement would be made outside of market hours to minimise any impacts from the publication.
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The FCA said it is likely to introduce an implementation period of three months, with up to five months for older agreements.
Citing the "scale and complexity of the scheme", the regulator is looking to streamline the compensation process for drivers and lenders.
Rather than asking consumers if they want to opt out, their lender will tell them whether they are owed compensation within three months of the end of the implementation period.
Consumers could also be able to accept a redress offer immediately, rather than waiting for a final determination.
The FCA said it would finalise rules for the car finance redress scheme in March, with drivers set to receive compensation within months
| PAFirms would also not be required to write to customers via recorded delivery, with a range of channels set to be used to prevent fraud.
As part of these streamlining changes, the FCA estimates that "millions of people" will receive compensation this year.
The FCA stated: "Our advice remains that anyone concerned they weren't told about commission involved in their motor finance deal should complain now.
"Doing so means they should get any compensation sooner. There is no need to use a claims management company (CMC) or law firm."
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The FCA said it would confirm the new rules later this month
| PAIt warned that drivers who sign up to a CMC or a law firm could lose over 30 per cent of any compensation they could be entitled to.
More than 800 misleading adverts have been removed by the FCA since the start of 2024, with five MCMs found to be causing harm.
The regulator said the likely changes outlined in its latest update were supported by many consumer groups and firms that responded to the consultation.
Commenting on the new update, Shanika Amarasekara, CEO of the Finance and Leasing Association, said the FLA was pleased that the regulator had listened to feedback.
Millions of people are believed to be eligible for the car finance compensation scheme
| GETTYShe continued, saying: "As the FCA has pointed out, their note will help firms prepare, should the scheme go ahead.
"However, it also shows a much more proportionate approach to how the scheme could operate in practise.
"We hope to see the same proportionate approach applied to the remaining proposals so that the overall scheme, if it goes ahead, would only compensate those customers who actually lost out."