Close Brothers Group, a major UK lender in the car finance sector, has announced plans for restructuring amid ongoing regulatory scrutiny from the Financial Conduct Authority (FCA). This development could significantly impact the availability and terms of car loans and leases for UK motorists. The FCA is currently reviewing over 12 million motor finance agreements covering £7.5 billion in potential redress, with an average estimated compensation of £829 per agreement.
The restructuring plan by Close Brothers Group aims to address concerns raised during the regulatory review, which has found widespread mis-selling practices across the industry. As a key player in car finance, this move could signal broader changes affecting how lenders operate and interact with customers.
What Does This Mean for UK Drivers?
Close Brothers Group's decision to restructure is likely to result in more stringent lending criteria and potentially higher interest rates for new car loans and leases. For motorists already holding agreements, there may be opportunities for redress if they were affected by mis-selling practices during the review period from 6 April 2007 to 1 November 2024.
The FCA's investigation has identified that a significant number of car finance agreements may have been mis-sold. Motorists who suspect they were victims of mis-selling should consider their options carefully and act swiftly, as redress schemes are often time-limited. The review process is ongoing, with the FCA expected to confirm specific compensation frameworks in the coming months.
How Can You Complain About Mis-Selling?
Motorists can complain directly to Close Brothers Group or any other lender involved without needing a claims management company. This service is provided free of charge and allows consumers to seek redress through official channels directly. The FCA recommends that motorists gather all relevant documentation, such as loan agreements and correspondence with the lender, before initiating a complaint.
What Redress Schemes Are Available?
The FCA's motor finance review has identified several instances where car financing was mis-sold or failed to meet regulatory standards. As of now, specific compensation frameworks are still under development but are expected to be confirmed by the end of 2023 and operational from early 2024 onwards.
Motorists may be eligible for redress if they entered into a PCP (Personal Contract Purchase) or HP (Hire Purchase) agreement during the specified period. The exact amount of compensation will vary based on individual circumstances, but an average of £829 is expected per affected agreement. Motorists can use MLJ's finance checker tool to determine their eligibility for redress.
What Should You Do Now?
Given the ongoing regulatory scrutiny and potential changes in lending practices, motorists should review their current car financing arrangements carefully. If there are concerns about mis-selling or if you believe your rights were violated, consider filing a complaint with your lender directly for free. It is crucial to act promptly as redress schemes often have strict deadlines.
To stay informed on the latest developments and ensure you understand your consumer rights in car finance, visit MLJ's dedicated pages on motor finance here and hire purchase here. For detailed guidance on dealing with the redress process, check out MLJ’s resources on FCA investigations here.
Remember to avoid using any claims management services that require upfront fees, as you do not need a claims management company to file a legitimate complaint. By staying informed and proactive, UK motorists can better protect their interests in this evolving regulatory situation.