UK Regulator Updates on Scheme to Pay Drivers £830

There is a legal challenge over a scheme.

The City watchdog warned about a scheme to repay UK drivers £830.

The regulator is very concerned about the industry's readiness to implement the £9bn redress scheme. It sent letters to over 100 firms after reviewing their plans.

The regulator said many firms are not ready to handle complaints. Their plans are not good enough to support timely and accurate payments.

Motor finance lenders will discuss the issue with the watchdog this week. Eligible claimants will get an average of £830, but the amount will vary.

The FCA has expressed concern.

The regulator will publish examples of good and poor practice soon. An industry insider said banks have experience with mass redress schemes, but manufacturers need to prepare quickly.

Major lenders face a £9bn bill under the scheme. The Supreme Court ruled that one claimant's commission was excessive, leaving the door open to a redress scheme.

The final proposals for the redress scheme were published in March and have faced legal challenges. Mercedes-Benz has set aside £400m, while Volkswagen has not made any provisions.

A customer campaign group is also challenging the redress scheme. The FCA will defend the scheme at the Upper Tribunal.

The FCA said preparation is necessary whether or not the scheme goes ahead.

Drivers will get compensation.

The regulator said firms' plans should set out how they will comply with the scheme rules. Many firms' plans are not good enough.

The regulator is concerned about the industry's dependence on underdeveloped systems and processes.

The FCA director said firms should prepare for all scenarios. Consumers and markets need confidence that complaints will be handled consistently and fairly.

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