The Finance & Leasing Association (FLA) submitted its response to the Financial Conduct Authority’s (FCA) consultation on a proposed Motor Finance Consumer Redress Scheme.
The FLA warns that the scheme as drafted ‘cannot deliver the fairness, simplicity, finality, efficiency or certainty the FCA set out as its own guiding principles.’
Shanika Amarasekara, CEO of the FLA, said: “Our submission is the product of extensive analysis by industry practitioners, economists and leading experts from across the motor finance market.
“The most important point is simple: a redress scheme must provide redress to those who have suffered loss as a result of an unfair credit relationship. Where we differ from the FCA’s proposals, it is because the evidence shows there are fairer, more targeted and more efficient ways to achieve that outcome.
“All eyes are now on the regulator and the industry. The best result is one where we work together to deliver redress swiftly to those who need it, protect consumers’ future access to finance, and create a scheme that is workable and credible for all.”
The FLA is urging the FCA to recalibrate the scheme so that it identifies and compensates only those consumers who have actually suffered loss, protects consumers’ long-term access to affordable credit, avoids awarding redress where no unfair relationship arose, and is operationally deliverable within a realistic implementation period.
The FLA’s response includes alternative methodologies for establishing liability and loss, and practical recommendations.
For example, the FLA believes the current obligation on firms to trace, contact and send registered letters to customers who are not owed redress is disproportionate, expensive, and risks overwhelming the system for no consumer benefit.
