Car deals: Consumers do not trust lenders
Public expectations of compensation over motor finance mis-selling are running “very high”, according to research published by Slater & Gordon.
With the Supreme Court ruling expected soon, the law firm warned that the Financial Conduct Authority’s (FCA) plan to reduce the need for lawyers has to be “carefully constructed to ensure consumers are protected from missing out” – or they will be willing to take legal action.
The poll of 4,005 people by Find Out Now found that 45% of people believed they were likely to be eligible for some sort of compensation over deals signed between 2007 and 2021.
The FCA is looking at setting up a formal redress scheme that would require the lenders who carried out the mis-selling to check their records and provide compensation.
However, while 62% of people trusted the FCA to resolve their issues fairly, only 11% would trust lenders.
Some 40% trust “an independent lawyer who only gets paid if you win”, while half of respondents said they wanted to have the option to hire a law firm for their claim.
Slater & Gordon said it backed the idea of a redress scheme but said the FCA risked “widespread disappointment and a potential backlash unless it is carefully constructed to ensure consumers are protected from missing out”.
Four in 10 respondents saying they would consider taking legal action to challenge the redress scheme if they were unhappy with the outcomes.
The law firm said the survey showed that more than half of people had moved house during the claims period and 13% had even changed their legal name, meaning that a redress scheme that relied on lenders to identify and trace victims of mis-selling “could miss out significant numbers of people”.
Elizabeth Comley, chief operating officer of Slater & Gordon, said: “The best way to ensure a redress scheme works well for everyone and resolves this scandal swiftly is to allow people the choice to hire a lawyer to support their claim.”
Alex Neill, co-founder of campaign group Consumer Voice, added: “Our own research shows that two-thirds of consumers would have acted differently if they’d known about dealer commissions, and many remain concerned about how those commissions impact what they pay…
“Any redress scheme must tackle drivers’ legitimate distrust of lenders and be built with fairness to consumers at its core. People must be given choice and clear information about their options and the compensation they can expect to receive.
“Resolving claims quickly is in everyone’s interest, but it must not come at the expense of people being denied proper access to justice.”
Alex Neill will be speaking about motor finance claims, along with lawyers involved in the Supreme Court case, at our Claims Futures conference on 22 October in Manchester. Early bird tickets are available now [1].