MOREINCOME

More than one million drivers face potential exclusion from compensation related to the car finance scandal, according to a recent warning. Slater and Gordon, a leading law firm, has identified that approximately 1.1 million low-value car finance agreements are unlikely to qualify for compensation under the currently proposed redress scheme.

The issue stems from the proposed scheme's focus on agreements deemed 'high-risk,' which primarily involves discretionary commission arrangements (DCA). These arrangements allowed car dealerships to receive additional commission based on factors beyond the agreed-upon price, potentially leading to inflated car prices and unfair finance terms for consumers. However, a significant portion of car finance agreements, particularly those considered low-value, do not fall under this category and are therefore excluded from the proposed compensation framework.

Slater and Gordon’s analysis indicates that these 1.1 million agreements, while individually smaller in value, collectively represent a substantial number of affected drivers. The firm is advocating for a broader approach to the compensation scheme that considers all potentially mis-sold car finance agreements, regardless of their value or the presence of DCAs. This includes exploring alternative avenues for redress for those drivers whose agreements are currently deemed ineligible.

The car finance scandal, which began gaining widespread attention in recent years, involves investigations into the practices of numerous lenders and dealerships. The Financial Conduct Authority (FCA) launched a review of the industry in 2018, leading to the identification of widespread mis-selling and ultimately the establishment of a redress scheme. While the scheme aims to provide compensation to affected drivers, the eligibility criteria remain a point of contention, with concerns raised about the potential for significant numbers of drivers to be left out.

Slater and Gordon is continuing to monitor developments regarding the compensation scheme and advising affected drivers on their options. Individuals who believe they may have been mis-sold car finance are encouraged to seek legal advice to understand their rights and potential avenues for redress.