Vanquis accepts FCA's motor finance redress scheme

(Sharecast News) - Vanquis Banking Group confirmed on Monday it would not launch legal action against the financial watchdog's motor finance redress scheme.

In a brief statement, the lender - formerly Provident Financial - said it had opted against challenging the Financial Conduct Authority's scheme to compensate consumers who have been mis-sold car finance, and that it was instead focused on implementation.

"The group did not participate in discretionary commission arrangements or operate tied selling arrangements and is therefore not in scope for these elements of the schemes," it said. "The group remains committed to ensuring appropriate redress to customers where loss has occurred."

Vanquis has already made a £3m provision to cover any claims, which it left unchanged.

Following a lengthy investigation, the FCA found consumers had been mis-sold car finance agreements between 2007 and 2024. Commissions were paid by lenders to car dealerships as part of financing for vehicle purchase. But both the FCA and courts found that the payments were not always disclosed to consumers, and could incentivise dealerships to charge higher interest rates.

At the end of March, the FCA outlined a proposed £9.1bn compensation scheme, with affected companies given until 27 April to launch any legal challenge. Other providers who are not challenging the scheme include Close Brothers, Banco Santander, Barclays and Lloyds Banking Group.

The FCA expects firms to pay out compensation totalling around £7.5bn, with the total bill set to rise to £9.1bn once the costs of running the scheme are included. Around 12.1m people are likely to be eligible for compensation.

As at 1000 BST, shares in Vanquis were largely unchanged at 111.8p.

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