Excessive avenue financial institution Santander has launched a scathing criticism of the automotive finance compensation scheme and delayed the discharge of its monetary outcomes “in light of uncertainties” it has prompted.
The Spanish-owned lender known as for presidency intervention – warning it sees the scheme as posing a wider risk to the economic system, jobs and customers.
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The scheme was arrange by monetary regulator, the Monetary Conduct Authority (FCA), to compensate individuals mis-sold automotive loans.
Beneath FCA proposals, as much as 14.2 million individuals might every obtain a mean of £700, as lenders broke the regulation by failing to reveal they paid fee to brokers. It meant clients misplaced out on higher offers and typically paid extra.
The proposal differs, Santander mentioned, “in important respects” from the Supreme Court docket ruling that paved the way in which for the redress plan.
Mr Regnier mentioned: “We believe that the level of concern in the industry and market is such that material changes to the proposed FCA redress scheme should be an active consideration for the UK government.
“With out such change, the unintended penalties for the automotive finance market, the provision of credit score and the ensuing unfavourable influence on the automotive trade and its provide chain might considerably influence jobs, progress and the broader UK economic system.
“This might additionally trigger vital detriment to the patron.
“What is at stake is the supply of credit that customers need and that supports a very important sector for the economy.”
Deferred outcomes
Santander was as a result of publish its newest monetary figures on Wednesday morning, however has held again till it says it will get “greater clarity” on the scheme and its influence on the financial institution and the broader market.
No new date to report outcomes was given. Launch of the identical third-quarter outcomes final yr was additionally deferred as a result of uncertainty over the influence of automotive mortgage mis-selling.
The hit to Santander, nevertheless, just isn’t anticipated to influence its operations or monetary place, even in a worst-case situation for the financial institution the place it has to allocate extra funds for compensation, it mentioned.
It had already put aside £295m to take care of the mis-selling.
The FCA mentioned, “We believe a compensation scheme is the best way to settle, for both lenders and consumers, liabilities that exist no matter what.
“Alternate options would price extra and take longer. It is important we draw a line underneath the difficulty so a trusted motor finance market can proceed to serve hundreds of thousands of households yearly.”
Santander mentioned it was dedicated to “ensuring fair outcomes” for its clients and can proceed participating constructively with the FCA, HM Treasury and different stakeholders.
