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Investing.com -- Britain’s Financial Conduct Authority said Friday that a tribunal hearing on legal challenges to its compensation scheme for mis-sold car loans is unlikely before October, and warned lenders to prepare for the possibility the scheme could be scrapped entirely.
Mercedes-Benz (ETR:MBGn) and Volkswagen (ETR:VOWG) are among four groups, including a consumer group, that have challenged a £9.1 billion ($12.3 billion) scheme imposed by the FCA on the UK motor finance industry for mis-selling.
The FCA unveiled its final compensation scheme earlier this year in an attempt to resolve a 17-year scandal.
Other lenders, including Lloyds Banking Group (LON:LLOY), Barclays (LON:BARC) and Santander’s (BME:SAN) UK arm, accepted the FCA’s revised scheme after collectively setting aside billions of pounds to pay affected consumers.
"We are engaging with the Tribunal and those who have challenged the scheme on the possibility of suspending some elements of it while retaining those relating to preparatory work," the FCA said Friday, adding it would provide another update soon.
Companies should prepare "on a precautionary basis" for a tribunal decision in mid-November, the FCA noted.
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