The probe into historic motor finance practices by some car loan providers could cost the industry £30 billion, according to ratings agency Moody’s.
The Financial Conduct Authority (FCA) was already investigating cases where car buyers were possibly overcharged for car finance through what is termed “discretionary commission arrangements (DCA)” agreed between lenders and dealership and Moody’s estimates this could cost the industry between £8bn – £21bn.
The recent October 25 Court of Appeal ruling on cases of ‘hidden’ commissions which upheld claimants’ appeals could widen the scope of the redress costs further and could add a further £9bn – making a ‘worst-case’ total of £30bn in potential compensation.
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