Drivers who think they may have overpaid on car repayment loans have been urged to step forward as the UK finance watchdog cracks down to protect customers.
The Financial Conduct Authority (FCA) updated customers of the progress of its investigation stating that while it pushes to get firms to engage, many are struggling to promptly provide data needed for the probe, but still wants to hear from as many people as possible.
The UK finance watchdog warned car payment loan companies to hold back cash as it investigates a series of allegations which saw consumers pay millions in commission.
In January this year, the regulator launched a review into whether people could be owed money for car financing schemes.
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FCA warned firms to hold back cash as it investigates
GETTYIt was launched after numerous complaints revealed drivers were being charged extortionate levels of interest on payments, which was claimed in commission.
The ombudsman service, which deals with consumer complaints, revealed it had registered more than 10,000 incidents already, with more coming in daily as people feared they overpaid.
Martin Lewis, the money saving expert, recently developed a tool to help people find out whether they were overcharged when purchasing a vehicle between 2007 and 2021.
The tool was used by drivers across the country and received over 30,000 complaints a day from angry people who were ripped off by discretionary commission arrangements (DCA).
In response, the regulator sent out a letter to car financing companies detailing what they need to do to comply with the investigation.
The letter said: “If we find there has been widespread misconduct and consumers have lost out, then our objective is to identify how best to make sure people receive an appropriate level of compensation in an orderly, consistent and efficient way.
“We expect you to undertake an assessment of whether your firm’s financial resources are adequate. This assessment should be proportionate to the scale and complexity of your regulated activities.
“The assessment is expected to be forward looking and must consider the risks, and potential liabilities, your firm is exposed to, including any potential redress liabilities.”
The FCA stated it expects firms to analyse the impact of making cost reductions, such as dividend payments.
The letter warned: “We may use our regulatory tools to intervene if we find your firm has not undertaken any assessment of adequacy of financial resources or may be at risk of not having adequate financial resources.
“Additionally, we will intervene if we identify actions that appear to be an attempt to avoid potential future liabilities.”
The FCA is expected to set out the next steps of the investigation by September 24 at the latest.
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Drivers who think they overpaid should register a complaint with Financial Ombudsman Service
PEXELSDrivers who think they may have overpaid in DCA are advised to register a complaint with the Financial Ombudsman Service.