FCA Proposes Massive Redress Scheme After Supreme Court Ruling

In the aftermath of a pivotal Supreme Court ruling, Britain's Financial Conduct Authority (FCA) has unveiled a proposed redress scheme for consumers seeking motor finance compensation. The plan could cost between £9 billion and £18 billion, aiming to address issues stemming from improperly disclosed commissions on car loans.

The decision, seen as favorable to banks, led the FCA to recommend an industry-wide compensation framework for certain claims. The FCA acknowledged the challenge in estimating costs precisely but sees the mid-range figures as plausible. Investors are now keenly focused on the FCA's directive concerning the scale and cost of the proposed scheme.

With lenders such as Lloyds, Barclays, and Santander having already allocated nearly £2 billion for potential compensation claims, the FCA has urged financial firms to reevaluate their liabilities and provisions. The scheme will scrutinize discretionary commission agreements dating back to 2007, ensuring future market integrity and consumer fairness.