FCA's Motor Finance Redress Proposal Amid Supreme Court Ruling

The Financial Conduct Authority (FCA) announced on Sunday its intent to introduce a compensation scheme for consumers affected by motor finance complaints. This move follows a pivotal Supreme Court decision last week.

The UK's highest court determined that car dealers arranging finance for vehicle purchases do not owe fiduciary duties to buyers, thereby absolving lenders from commission liability. This development uplifted US-listed UK bank shares, alleviating some investor concerns over costly redress implications.

Despite the court's decision, the FCA remains committed to proposing a compensation model, emphasizing that any initiative will account for potential dealings between lenders and borrowers that might have been unjust. Estimates for the scheme's cost range from £9 billion to £18 billion, and consultations are expected to conclude by early October, with compensation dispensed by 2026.

(With inputs from agencies.)