Bank of Ireland will find out on Monday how UK motorists who were mis-sold a car loan will be compensated, as the finance watchdog shares its final plans for an industry-wide scheme.
Final decisions on the long-awaited programme will be published by the Financial Conduct Authority (FCA) on Monday afternoon. The regulator set out draft plans last year but it is likely to make several changes after receiving more than 1,000 responses to its consultation.
Under the latest proposals, the scheme will cover car finance agreements taken out between April 6th, 2007 and November 1st, 2024. The FCA estimated that around 14 million deals, or 44 per cent of all those made since 2007, were unfair and therefore eligible for compensation.
Consumers were estimated to be compensated an average of £700 per agreement, but it will be more or less depending on individual cases.
This was expected to come at a total cost of £11 billion to the industry, including the total payouts and the operational costs of running the scheme.
Bank of Ireland has a 2 per cent share of the UK motor finance market, suggesting it faces a £220 million final bill. have The bank is understood to set aside cumulative provisions of €429 million for redress and compensation.
Craig Tebbutt, a financial health expert for Equifax UK, said many consumers did not know how to check their eligibility and he expected the process to be a hassle, with old or missing paperwork being a real problem.
Lenders and car finance providers had been challenging the FCA’s proposals with some raising concerns that the expected amount of compensation is too high and does not accurately reflect what customers lost.
On the other side, some consumer groups and MPs have argued that many motorists will be short-changed under the current plans.
The FCA has already announced some changes that it is making to the process since the proposals were unveiled last year. This includes giving lenders more time to contact motor finance customers from when the scheme is officially launched.
But it is also aiming to streamline the process by allowing those due redress to accept it immediately without waiting for a final determination. It thinks that this means million of people would receive compensation in 2026. - PA
