Business news live: Experts say car finance compensation ‘not a PPI repeat’ and FTSE 100 rises as stock markets recover – UK Times

Greek energy and metals group Metlen, which used to be called Mytilineos Energy and Metals, has begun trading today on the London Stock Exchange.

It’s real relevance will come with the next FTSE 100 index reshuffle next month; with a market capitalisation value of £5.4bn, it will be big enough for inclusion.

Housebuilders Berkeley Group and Taylor Wimpey are the smallest in the 100 at present by the same valuation, around £3.5bn.

Payouts for the car finance compensation scheme have yet to be determined, with the FCA now starting a review.

But one industry insider says it’s far from clear how compensations will be awarded or even how eligible customers could be decided.

“I just think that is completely impractical. It is not just firms that don’t have the details about contracts back then, customers don’t either,” said Stephen Haddrill, director general of the Finance & Leasing Association, on BBC’s Today programme.

Lenders are set to be subject for between £9-18bn in payouts.

People who think they might be owed compensation for the car finance mis-selling ruling shouldn’t speed out to sign up with claims firms, believes Paul Barker, editor at Auto Express.

“Today’s Supreme Court ruling – which found that car finance firms did not unlawfully mis-sell products simply by failing to disclose commissions – narrows the scope for car finance compensation claims, but it doesn’t eliminate them entirely. Anyone who signed up for a Discretionary Commission Arrangement (DCA) between 2007 and 2021 should still be eligible for compensation; the FCA is expected to set out next steps regarding this ruling in the coming weeks.

“In the meantime, we strongly advise against using claims management firms, which often take a hefty cut of any compensation. Instead, there are free tools and official routes available to help you make a claim directly. And if the FCA introduces the mooted ‘opt-out’ scheme, you may not need to do anything at all – your lender will be required to contact you. Until then, sit tight, avoid unnecessary fees, and keep an eye on updates from the regulator.

“However, it is worth pointing out that there may still be further legal twists and turns as the case evolves.”

While the Supreme Court’s ruling last week means lenders could have to pay out between £9-18bn to consumers affected, it won’t be another PPI scandal, says one expert.

AJ Bell investment director Russ Mould said that while it wasn’t an outright victory for lenders, the ruling payouts should ultimately be covered by what banks have set aside.

“Lloyds has confirmed what everyone will have guessed based on last week’s Supreme Court ruling on motor finance mis-selling. The worst-case scenario, like a particularly ugly pothole, has been swerved,” said Mr Mould.

“This wasn’t a complete win for the industry, with lenders still potentially on the hook if the relationship with customers meets the threshold of being unfair.

“This, and subsequent comments from the FCA about setting up a compensation scheme which could still result in hefty payouts may have created mild concern, but Lloyds has notably confirmed any further provisions in this area are unlikely to be material.

“Barclays shares also got a boost, albeit a more limited one reflecting its lesser exposure in this area, while Close Brothers, which had almost been sent to the scrapyard by investors over the affair, sparked into life off the back of the Supreme Court judgement.

“Essentially, while this issue could still cause some damage, it looks unlikely to be a repeat of the PPI scandal which blighted the banking industry in the 2010s.

“The gap between existing provisions by lenders and the sums being talked about by the FCA is substantial but this could partly reflect the fact that the finance arms of the major car manufacturers do not seem, to date, to have made material provisions in this area.”

Chinese-founded fast fashion company Shein, who had been exploring an IPO in London until earlier this year, have been fined 1m euro (£870,000) by the Italian competitions authority.

The huge fee is over misleading customers on environmental claims, saying recyclable information was “false” or “confusing”, along with overstating the impact their design had.

Shein’s claims were “sometimes vague, generic, and/or overly emphatic, and in other cases omitted and misleading,” read the report.

Even so, the 1m fine pales into comparison to the 40m euro fine (£34.8m) fine given to Shein by French authorities last month over fake discounts and similar misleading environmental claims.

The FTSE 100 has continued to surge higher this morning as investors digest weekend news and take stock.

Between car finance uncertainty and Trump tariff changes, last week definitely ended on a low note – but the FTSE 100 is up 0.5 per cent this morning.

That’s led by Lloyds rising more than 7 per cent, but the likes of Rolls Royce, Barclays and miner Antofagasta are all up more than 2 per cent too.

In Europe, Germany’s DAX is up 1.3 per cent, France’s CAC 40 is up 0.9 per cent and the pound to the dollar rate is up 0.13 per cent to $1.3296.

The ruling on Friday came after stock markets closed, meaning market reaction hit at the start of the new week – with Lloyds Bank rising more than 7 per cent and Chase Brothers shares shooting up more than 30 per cent initially, before settling back to just over 20 per cent up.

Others in the British banking sector also rose, with Barclays and NatWest up close to 2 per cent.

Lenders are on the line to pay out up to £18bn in compensation to those affected, but the ruling found them not liable for hidden commission payments which could have sent reimbursement costs soaring.

Full details here and what the lenders have said:

Drivers should be “very pessimistic” about getting any compensation for taking out a car loan after a landmark ruling by the Supreme Court, experts have warned.

Industry analysts also said on Friday that banks will “breathe a sigh of relief” after the Supreme Court ruled they are not liable for hidden commission payments in car finance schemes.

Nevertheless, the financial watchdog has said it is still considering whether to launch a redress scheme for consumers who potentially receive compensation.

The Financial Conduct Authority is launching a compensation consultation which will determine how much is paid out to millions of people who paid more interest than they knew about.

A Supreme Court ruling on Friday (1 August) found that lenders are not liable for hidden commission payments in car finance schemes, a decision which means most of the claims will not go ahead, but only the most serious claims will be eligible for compensation.

But many cases in a separate strand of the car finance mis-selling case, which was not part of the Supreme Court ruling, are still likely to receive payouts, Mr Lewis explained.

More here from Alex Croft:

The Financial Conduct Authority (FCA) suggests most individuals will get less than £950 compensation, based on total payouts.

A statement on Sunday said the FCA will start a consultation period on an “industry-wide compensation scheme” which will now run for some time.

The FCA also said they will come up with rules for determining compensation levels.

Those rules will determine “how lenders should consistently, efficiently and fairly decide whether someone is owed compensation and how much”

The FCA will also ensure firms are following those set down rules and act accordingly if they’re not.

Nikhil Rathi, chief executive of the FCA, said:

“It is clear that some firms have broken the law and our rules. It’s fair for their customers to be compensated. We also want to ensure that the market, relied on by millions each year, can continue to work well and consumers can get a fair deal.”

“Our aim is a compensation scheme that’s fair and easy to participate in, so there’s no need to use a claims management company or law firm. If you do, it will cost you a significant chunk of any money you get.”

“It will take time to establish a scheme but we hope to start getting people any money they are owed next year.”