BMW sets aside more than £200m for UK motor finance scandal
BMW’s UK car finance business has set aside more than £200 million to cover the potential impact of the continued fallout from the car loan mis-selling scandal.
It is the latest car firm to reveal the potential cost of the motor finance scandal, with millions of drivers expected to be eligible for compensation claims.
The financial regulator, the Financial Conduct Authority (FCA), is currently consulting on an industry-wide redress scheme for consumers who lost out when they took out a car loan between 2007 and 2020.
This is because it thinks many banks and motor finance firms broke the law or its rules by not properly telling customers about commission paid to dealers, meaning people may not have got a fair interest rate on the deal.
Accounts
The FCA said earlier this month that is hopes to start redress payments to affected customers next year.
In the company’s latest set of accounts filed with Companies House, BMW Financial Services said it set aside a provision worth £206.9 million by the end of 2024 to cover historic motor commission claims.
A year earlier, the company had set aside a provision of £70.3 million.
BMW said it has received a “number of complaints” related to historical commission, adding that some of these are currently being looked at by the Financial Ombudsman Service.
The company said its provision includes the cost of making compensation payments, administration costs and legal costs.
BMW stressed that there is still “considerable uncertainty” regarding the outcome of redress claims, highlighting that these could still be “materially less than or greater” than the provision.
Payouts
It said a 5% increase in potential payouts would require a £31 million increase in the size of its provision.
The accounts were signed off prior to a major Supreme Court verdict last month regarding the scandal, which partly sided with industry and avoided a worst case scenario for motor finance firms.
BMW has been contacted for comment.
Support our Nation today
For the price of a cup of coffee a month you can help us create an independent, not-for-profit, national news service for the people of Wales, by the people of Wales.
Car manufacturers and the finance companies that have worked with them are, rightly, facing a number of issues, not just this dealer scandal but from faulty diesel emission filters to added insurance (PCP) costs. These scandals are just the tip of the iceberg in rip-off Britain with fuel companies and supermarkets getting in on the act too. Fleecing the individual for all he or she is worth is the name of the game these days and governments do nothing about it, regardless of the colour in power, as much of Westminster is up to it’s neck in it too. It’s… Read more »
Ah, I almost forgot the other huge rip-off these days – naughty me – car insurance. My recent renewal price was 150% higher than this year’s!! (Understandably I laughed in the company’s face!). Even though I’ve had no claims for years and years. As I said – Rip-off Britain.