The Financial Conduct Authority and the Financial Ombudsman Service have issued a call for views on how to review consumer compensation schemes involving financial companies.
The move comes after Chancellor Rachel Reeves said in a speech at Mansion House last night that the current remedial approach “creates uncertainty and could be a drag on investment” for businesses. be. 
He said the government was “working closely” with both agencies to develop the new agreement, which aims to “significantly improve the rules governing how services operate”.
The call is open to industry, think tanks and consumer groups and has a deadline of January 30th.
The regulator said: “The current redress framework works well for individual customer complaints about specific issues.
“However, problems can arise if we receive a large number of complaints about the same issue. We call this a collective redress event.”
“These challenges can be exacerbated if companies do not identify problems early or proactively address them when they occur.”
The bodies state that they would like to better understand the following:
How can the current framework be modernized? The issues that collective relief events and relief schemes in general pose for businesses and consumers. How organizations can modernize their relief framework to better identify and manage collective relief events. How can agencies work together to ensure consistency of view on regulatory requirements?
The most famous mass bailout in British corporate history cost banks around £50bn in losses after selling unnecessary insurance to millions of customers who bought it alongside personal loans. The protection insurance scandal.
Issues with this product first became apparent in the early 1990s, but took more than 20 years to resolve.
Last month, consumer groups won a landmark Motor Finance Misselling Appeal Tribunal victory in a case that could force lenders to pay billions of pounds in damages to borrowers, the biggest since the Payment Protection insurance scandal. There is a possibility that this will become a collective relief case.
The case found that it was illegal for lenders to pay fees to car dealers without the borrower's knowledge.
Since the incident, the bank has been considering potential liability.
Broadstone Relief Director Brian Nimmo said: “The Financial Conduct Authority and the Financial Ombudsman Service are exploring ways to modernize the relief framework for large-scale rescue events, as we have seen in several high-profile cases such as Payment Protection Insurance. The current car finance survey may perhaps form another such example.
Nimmo added: “A more effective framework for large-scale relief events would not only benefit consumers in receiving compensation in a timely manner, but would also allow businesses to reduce their interest payments, for example, and reduce the amount of interest paid when the problem is large-scale.” “It will also help minimize costs by resolving incidents more quickly and preventing them from becoming serious events.”
