Following the legal challenges to our motor finance compensation scheme, we are setting out further advice for firms and consumers. Our priorities remain to secure fair compensation for consumers as quickly as possible and ensure a healthy motor finance market.Our industry-wide scheme is the quickest, fairest and most cost-effective way to do this. As we have said, we welcome the commitment of most lenders to implement the scheme and will defend it robustly.We have summarised below the grounds of challenge we have received.It is unclear when the case will be heard. It is unlikely to be before October. We are engaging with the Tribunal and those who have challenged the scheme on the possibility of suspending some elements of it while retaining those relating to preparatory work. We will provide a further update as soon as possible.We recognise the operational strain and uncertainty firms face. We also acknowledge the frustration of consumers, many of whom have waited over 2 years for an answer.Firms should continue to prepare for the scheme until we communicate otherwise. Work that can be done now and would likely be needed in all scenarios includes:Identifying relevant complaints and agreements.Gathering the data needed to identify commission arrangements and disclosure practices, including where information is held by brokers.Working with claims companies to resolve instances where consumers are represented by more than one party. Cooperating fully and promptly with the Financial Ombudsman Service on any existing complaints that have been referred to it. To help us better understand firms’ approaches, they should still submit implementation plans by 12 May. We recognise they may need to qualify those plans and therefore we will not insist on receiving formal attestations by 12 May. Lenders should speak to their supervisor if they have any concerns.We will be pragmatic and will not require firms to communicate to customers as required by the scheme timetable.We will keep this under review as the Tribunal timetable becomes clearer and engage with lenders and consumer groups on whether any further consumer communications may be appropriate.Where complaints include both elements that fall within the scheme and elements unrelated to motor finance commission, we will consider whether firms should now progress the unrelated elements. Complaints that are entirely outside the scope of the scheme should continue to be progressed in the usual way.
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