Britain’s financial car scandal could be as big as the payment protection insurance (PPI) mis-selling saga, which cost UK banks £50bn, the city’s top lawyer has admitted.
Stephen Braviner Roman, the Financial Conduct Authority’s general counsel and executive director of legal affairs, said. The October impact of the appeals court ruling on the car finance commission expanded the potential target of pain.
The rulings established that a “secret” commission was paid to car dealers who had arranged loans without disclosing the amount and terms of that commission, making the loans illegal.
The judgment ended an ongoing investigation by the FCA into the way certain commission payments are made, known as discretionary commission arrangements (DCA), which were banned by the regulator in 2021.
“We said we are only looking at DCAS, we don’t think there is a PPI scale,” Roman Braviner told MPs at a Treasury Committee hearing on Tuesday. “But that was when we were only looking at DCAS. So I think it would be premature to say that it is not a reliable PPI scale now.
It suggests that the resulting costs for lenders, including Lloyds, Santander UK and Close Brothers, could exceed Moody’s estimates of £30bn.
Earlier this year, the chief executive officer Nikhil Rathi shot down the comparisonsaying that he “doesn’t take this matter forward as the PPI did”. There was an attempt to force it after MoneySavingExpert.com founder Martin Lewis said it could be the biggest pay bill with PPI.
But the appellate court’s ruling shakes the roof of another investigation. Creditors involved in the motor financial appeal cases – Close Brothers and MotoNovo owner FirstRand – are in the process of appealing the ruling in the Supreme Court.
PPI was Britain’s most expensive and longest running chainsaw. As many as 64m policies were sold in the UK – mostly between 1990 and 2010, and some as far back as the 1970s – alongside loans, mortgages, credit cards and other deals.
Regulators began imposing the funds in 2006 after they discovered a costly cover often aggressively pushed and sold by banks that said they would pay the machines if they lost a sick borrower or lost their jobs. But while the plans were useful for banks, the policy exclusions meant that in many cases customers could never sue.
Creditors continued to charge large amounts of money and compensation to customers from the scandal until 2019, asking for a final industry bill of around £48.5bn.
Meanwhile, the chief executive of the FCA has warned of the chancellor’s plans to dissolve the organization and taking more strength and risk through the city they inevitably attract bad actors.
“We can’t stop everything. If we allow more risk in the system … sometimes it attracts people who don’t have the best intentions,” Rathi said.
He was addressing Rathi the contents of the letters to be sent to the chancellor; who said efforts to protect consumers were not hindering “sensible risk-taking” across financial sectors. She also urged the FCA to support more growth and competitiveness of city firms.
The release of the letter was sent hours after the governors of the banks were called to the annual House of Commons dinner, where they said that regulations were put in place to protect the economy after the 2007-08 global financial crisis. that “exceed”.
His message proved controversial as lax corporate governance was blamed for contributing to the collapse of the Royal Bank of Scotland in 2008. RBS’s failure exacerbates the global financial crisis, with the government spending tens of billions of pounds to bail it out. banks, and leading years to recession and austerity across the UK.