COMPENSATION claims of up to £150,000 could be awarded for motor finance complaints found to have “merit”, the Channel Islands Financial Ombudsman has confirmed.
The figure was cited in a recent statement, clarifying that Jersey and Guernsey do not have a statutory compensation scheme equivalent to the one being established by the UK Financial Conduct Authority in response to an industry-wide motor finance scandal.
The redress initiative follows the FCA’s investigation into the use of discretionary commission arrangements in which the broker – often a car dealer – could adjust the interest rate being offered to obtain a higher commission.
It discovered “widespread failures to adequately disclose the existence and nature of commission and contractual ties between lenders and brokers” and that many consumers “may have overpaid” as a result.
CIFO chief executive Douglas Melville has previously explained that motor finance complaints in the Channel Islands are “absolutely” within his office’s mandate.
But the recent statement sought to clear up any “confusion” about the rights to complain and potential compensation routes available to consumers who took out motor finance through their car dealer with financial service providers based in Jersey and Guernsey.
“The Channel Islands (Jersey and the Bailiwick of Guernsey) do not have a statutory compensation scheme equivalent to that being established in the United Kingdom,” it stated.
“The redress scheme being put in place by the UK Financial Conduct Authority
(FCA) for UK consumers of motor finance does not apply to consumers of motor finance in
the Channel Islands.
“If you have a complaint about financing you agreed to in connection with the purchase of a car or other type of vehicle, we may be able to review your concerns.”
The statement continued: “Complaints about motor finance provided in the Channel Islands fall within the statutory remit of the Channel Islands Financial Ombudsman to review.
“Where we find a complaint has merit, we can award compensation for loss incurred up to a maximum of £150,000.”
It reiterated that consumers first have to lodge a complaint with the provider before approaching the Channel Islands Financial Ombudsman.
“They must first be given the opportunity to resolve the issue directly with you,” it added, noting that those unhappy with the outcome – or who did not receive a response within three months of raising the complaint with the dealer or lender – could then bring it before the CIFO for independent review.
“We will investigate your complaint, seek to find an informal resolution between you and the provider, and if no agreement can be reached, make a final decision on the complaint.
“In reaching any decision about the compensation you may be owed we will have regard to what is fair and reasonable in the circumstances.”
