Motorists in Jersey have been urged to check car finance deals after millions of drivers were mis-sold motor finance agreements and are set to receive compensation later this year.
The Financial Conduct Authority (FCA) set out its proposal for a redress scheme, costing lenders £9.1bn, last week – it’s estimated 12.1 million motor finance deals will meet the criteria.
The Jersey Consumer Council has encouraged anyone who thinks they might have been mis-sold car finance to contact the dealership or finance company who sold it.
It has created downloadable template letters for people to use to investigate potential commission issues in their agreements.
Pay-outs are expected to total an average of around £829 per person in compensation.
It said the letters, which can be sent to both car dealers and finance, would allow “consumers to take the first formal step in establishing how their finance was arranged”.
It said it was intended to help those affected find out whether commission was paid on their motor finance and whether that commission may have influenced the interest rate or terms of the loan.
Claims can be made for any car finance taken out after 2010.
The Consumer Council said in Jersey as with the UK, some arrangements allowed dealers to increase the interest rate offered to a customer in order to earn a higher commission, a practice that had since attracted regulatory and legal scrutiny.
It said the key issue was “transparency”.
“Borrowers should have been clearly told whether commission was being paid, how it was calculated, and whether it could affect the cost of their borrowing.”
The council said the letters were designed to be straightforward, and request written confirmation of whether discretionary or flat commission arrangements applied, or whether there were exclusive relationships between dealers and finance companies.
It added if commission arrangements did apply and were not disclosed, the letters allow customers to raise a formal complaint.
If firms were unable to confirm the position, the correspondence could also operate as a data subject access request, requiring companies to provide relevant records under Jersey’s data protection law.
It said once people received either a rejection letter, or no reply within three months, they could raise the issue with the Channel Islands Financial Ombudsman.
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