Britain's FCA to publish motor finance redress plan on March 30

Britain’s Financial Conduct Authority (FCA) will update the market on March 30 about a multi-billion pound redress ​package for millions of consumers affected by mis-sold motor finance, the regulator’s ‌chief executive said on Tuesday.

Nikhil Rathi told a parliamentary committee that the FCA would set out its approach to one of the country’s most expensive mis-selling scandals ​shortly after markets close.

The FCA last October proposed an 11 billion pound ($14.74 ​billion) compensation package, accusing the industry of inadequately disclosing commissions paid by ⁠lenders to motor dealerships and other commercial ties that it said encouraged brokers ​to charge more for car loans between 2007 and 2024.

The proposals have drawn ​sharp criticism from both industry and some consumer groups.

Some in the industry, which includes the likes of Lloyds, Santander, Close Brothers, Barclays and the finance arms ​of car manufacturers, have warned the FCA could face time-consuming legal challenges unless ​it recasts its proposals, industry sources have told Reuters.

The sources said the FCA’s ‌redress ⁠methodology included a broader-than-expected definition of what constitutes an unfair loan and a lower-than-expected bar for “excessive” commissions.

Rathi has said the regulator, under pressure from Britain’s Labour government to support economic growth by easing the ​regulatory burden on the ​finance industry, ⁠could adjust and refine plans if it sees convincing, evidence-based feedback during a consultation.

In the meantime, some ​in the industry have hiked financial provisions, with Lloyds putting ​aside almost ⁠2.0 billion pounds.

Close Brothers, accused this month by short seller Viceroy Research of misrepresenting its exposure to the redress payments, has said it would ⁠cut a ​fifth of its workforce by 2027.

The ​specialist lender, whose stock plunged more than 10%, said it “strongly disagrees” with the short seller’s report.