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The UK financial watchdog has said motor finance companies should start handling complaints two months earlier than originally planned, as it finalizes a compensation plan for those affected by the mis-selling saga.
financial conduct authority (FCA) will lift the freeze on the resolution of some motor finance complaints on 31 May, instead of the previously proposed 31 July deadline.
Companies must already investigate complaints, but they are not required to respond since the FCA halted the process in January 2024.
Its purpose was to prevent disorganization and disloyalty, while it planned an industry-wide compensation plan.
“It is likely that we will move forward with a scheme in which complaints under this will be dealt with under specific rules, including timescales for their resolution,” the FCA said in an update on Wednesday.
The proposed scheme will compensate motorists who were mis-sold car loans between 2007 and 2024 because they were not properly informed about the commissions paid to brokers, including car dealers.
The regulator’s plan, which is expected to see about 14 million deals eligible for compensation, has faced significant opposition from lenders.
It is currently consulting on the details of the scheme, which is expected to launch early next year.
The FCA said ending the moratorium on handling complaints two months ahead of schedule gives companies enough time to prepare to respond to them.
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It expects most complaints to fall within the scope of its redress scheme – but companies will also need to be prepared to respond to those that don’t.