The Monetary Conduct Authority and the Monetary Ombudsman Service have issued a name for enter for views on find out how to revamp shopper compensation schemes that contain finance companies.
The transfer follows Chancellor Rachel Reeves speech Mansion Home speech final evening the place she mentioned the present “method to redress could cause uncertainty and be a drag on funding” for firms.
She mentioned the federal government had “labored intently” with the 2 our bodies to develop a brand new settlement, which seeks “to considerably enhance the principles governing how the service operates”.
The decision is open to trade, thinktanks and shopper teams and has a 30 January deadline.
The regulators say: “The present redress framework works properly for particular person buyer complaints about particular points.
“Nonetheless, challenges can happen when there are giant numbers of complaints about the identical concern, we describe these as mass redress occasions”.
“These challenges will be compounded if companies don’t establish points early or don’t proactively tackle hurt the place it happens.”
The our bodies say they need to higher perceive:
How the present framework might be modernised
The issues that mass redress occasions and the redress scheme basically trigger companies and customers
What modifications the our bodies may make to the redress framework to allow us to raised establish and handle mass redress occasions
What modifications might be made to how the our bodies work collectively to make sure their views on regulatory necessities are constant
Essentially the most well-known mass redress occasion in UK company historical past is the cost safety insurance coverage scandal that value banks round £50bn, after promoting thousands and thousands of shoppers pointless insurance coverage they purchased alongside private loans.
Issues across the product first got here to mild within the early Nineties, however took over twenty years to resolve.
Final month shopper teams gained a landmark automobile finance misselling courtroom of enchantment case that will see lenders pressured to pay billions of kilos in compensation to debtors, which might be the most important mass redress occasion for the reason that cost safety insurance coverage scandal.
That take a look at case discovered it was illegal for lenders to have paid commissions to automobile sellers with out the debtors’ data.
Since that case banks have been weighing up their potential liabilities.
