In a statement this week, the FCA said it is currently reviewing the past use of discretionary commission arrangements to discover if firms failed to comply with requirements, resulting in losses to consumers. If so, it aims to ‘make sure consumers are appropriately compensated in an orderly, consistent and efficient way’.
Under an FCA scheme, ‘firms would be responsible for determining whether customers have lost out due to the firm’s failings. If they have, firms would need to offer appropriate compensation. [The FCA] would set rules firms must follow and put checks in place to make sure they do’. This would be ‘simpler’ than bringing a complaint, with fewer consumers forced to rely on a claims management company.
The Supreme Court is due to hear an appeal on the issue next month, in which the FCA has been granted permission to intervene. The court refused an application by the chancellor, Rachel Reeves to intervene.
The FCA said it will confirm whether it is going ahead with a scheme within six weeks of the court’s decision.
In October, the Court of Appeal held buyers of cars have a right to know about, and must give consent to, any commission arrangements between their finance lender and car dealer, in Johnson v FirstRand Bank [2024] EWCA Civ 1282.
Kavon Hussain, principal of Consumer Rights Solicitors, which acted for two of the appellants, predicted the judgment would ‘affect every lender in the market’ with potentially as much as £42bn owed to consumers. Other commentators have compared the case to the payment protection insurance (PPI) claims which cost banks billions in compensation and led to a feeding frenzy for claims management companies.
.tmb-mov69x69.jpg?sfvrsn=b21f1aaf_1)
.tmb-mov69x69.jpg?sfvrsn=754d0e82_1)
