The FCA said it would write to the Supreme Court asking it to make a quick decision on whether it will allow lenders to appeal to last month’s crucial ruling by the Court of Appeal, which has deepened the motor finance mis-selling scandal.
The call for speed comes amid concerns about the impact of the crisis on the banking sector and the car industry.
A judgment from the Court of Appeal said it was unlawful for car salesmen to receive a commission of any kind from banks providing motor finance without obtaining the customer’s informed consent.
The ruling opened up banks to far broader claims than an early scandal over hidden commissions in car finance loans.
Greater payouts for customers
Complaints to car finance lenders have surged since the judgment, the FCA said. As a result, the watchdog said it would launch a swift consultation lasting just two weeks to give lenders extra time to handle grievances.
The crisis has already wiped billions of pounds off the value of banks and forced several lenders to set aside hundreds of millions to deal with potential claims.
The ruling also threatened to bring the car sales market to a standstill, with lenders and dealerships forced to quickly change their business practices to ensure they complied with the ruling.
The FCA’s decision to give lenders more time to deal with claims has led to suggestions that the scandal will lead to greater payouts for customers.
Fitch, the influential credit rating agency, has warned that UK banks could come under pressure from the Court of Appeal ruling, which “materially increases” the likelihood of a redress scheme to compensate customers.
Alessia Agneto, an analyst at Morningstar, said Santander UK, Lloyds Banking Group and Barclays were “exposed” to the scandal, adding that the car finance sector faced “considerable uncertainty”.
The FCA said: “Motor finance firms are likely to receive a high volume of complaints in response to the recent Court of Appeal judgment.
“Any complaint extension would allow them time to consider how these might be efficiently and effectively handled.
“This would help prevent disorderly, inconsistent and inefficient outcomes for consumers making complaints, motor finance firms and the market.”