Another motor finance firm in the spotlight as Close Brothers reveal a loss of £122.4 million plus £33 million in provision for customer redress [1]. A second UK motor finance company rocked by the costs of the growing claims mountain emerging from the mis-selling of car loans. Millions of customers have been affected and now is the time to make a car finance claim. Consumer rights in the UK are an area where lenders should be aware of their obligations.

Close Brothers’ Setback: More Than Just Numbers

Close Brothers' financial problems are due to a combination of overpayments by customers and "long-standing issues" with its motor finance business. The £33 million provision is for the repayment of amounts owed to customers who have paid loans off early and were not repaid in full.

The overpayments, the company says, are “a lot of very small amounts going back some time” that is indicative of wider industry failings. This is on top of £165 million already set aside for commission compensations related to FCA investigations into lender-dealer relationships.

Analysts have said that the car finance scandal may change the way lenders manage their books and deal with customers in the future, with the FCA planning to set up a full redress scheme.

Supreme Court Ruling and FCA Consultation: Consumer Protections in Focus

The 1 August Supreme Court judgement [2] upheld that terms in some car finance agreements between 2007 and 2021 created an “unfair relationship” between lenders and consumers under the Consumer Credit Act. The outcome of the case has significant consequences for people thinking of making PCP claims or car finance mis-selling claims. The FCA will carry out an open consultation in October [3] that indicates it is looking to formalise redress.

The FCA expects to pay compensation to millions of mis-sold car finance customers next year. Average redress will be around £950 per eligible agreement [4]. Issues like missing paperwork and customers moving multiple times could cause some delays in payouts. See the latest news on UK car finance claims in our guide.

Consumers need to be cautious and not rely solely on the lenders. The Supreme Court ruled that as many as 14 million people were mis-sold car finance. However, only 23% think lenders will handle payouts fairly [5]. Records may be missing or deleted and over 8 million potential claimants have lost paperwork. Some financial experts are suggesting people wait for the official redress scheme, but for some, including the 57% who have moved home, action is needed.

Seeking Professional Assistance: Why a Claims Management Company Matters

A car finance claims expert can help demystify the process of making a car finance claim. A credible and qualified claims management company will ensure consumers get the redress they are owed, taking all correspondence with lenders and the FCA.

Services such as Reclaim247 offer a no-paperwork, no-win-no-fee approach, requiring only your name, address, and date of birth. Claims are run by solicitors authorised by the FCA. You could get tens of thousands of pounds back in car finance refunds. How long does Reclaim247 take to make a claim? It generally depends on the legal development and updates but you can check more information in the Reclaim247 website.

If you're looking into making a PCP claim, or finance claims in general, the reassurance of Supreme Court backing and the assistance of a professional claims service could put you on the road to a much smoother consumer justice. Don't delay, or you could lose out due to lost paperwork, or time-wasting lender red tape.

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References:

1. Another motor finance firm in the spotlight as Close Brothers reveal a loss of £122.4 million plus £33 million in provision for customer redress - https://cardealermagazine.co.uk/motor-finance-scandal-bites-hard-as-close-brothers-loses-122-4m-with-additional-33m-car-loan-blow/318920
2. The 1 August Supreme Court judgement - https://supremecourt.uk/uploads/uksc_2024_0157_0158_0159_judgment_2bb00f4f49.pdf
3. The FCA will carry out an open consultation in October - https://www.fca.org.uk/news/press-releases/fca-consult-motor-finance-compensation-scheme
4. Average redress will be around £950 per eligible agreement - https://www.birminghammail.co.uk/motoring/motoring-news/14-million-drivers-could-receive-32193839
5. only 23% think lenders will handle payouts fairly - https://www.slatergordon.co.uk/newsroom/consumers-trust-the-financial-conduct-authority-to-resolve-the-car-finance/