FCA to reveal compensation for millions mis-sold car finance
FCA to reveal compensation for millions mis-sold car finance
The FCA will publish final rules detailing payouts for up to 14 million motor finance deals, with average payments around £700 and potential legal challenges ahead.
Millions of drivers will learn how to claim compensation for mis-sold car finance as the Financial Conduct Authority reveals its final rules for a central redress scheme covering around 14 million motor finance agreements. The payouts are expected to average around £700, with the exact amounts depending on the terms of each deal and when it was signed. The FCA says the scheme is designed to be fast and avoid costly court battles, though some buyers may still pursue claims in court in pursuit of higher payouts.
Behind the numbers is a long-running saga that has seen lenders questioned, a Supreme Court ruling, and a shift away from dealer-paid commissions. The regulator said the scheme will address issues such as how lenders paid dealers, unfair contract terms, and inaccurate information given to buyers. It also notes that discretionary commission arrangements, once common in the industry, were banned in 2021.
Officials estimate roughly 44% of motor finance deals issued from 2007 to late 2024 could be eligible for redress, with potential payouts totalling more than £8 billion. Lenders could face administrative costs of around £3 billion as they handle the claim process. The plan aims to deliver redress without forcing every case into court, although a Court route remains an option for those seeking bigger sums.
The final decision will be published this afternoon, marking a milestone after years of controversy. However, the FCA cautions that the scheme could still attract legal challenges from lenders and claims-management companies, potentially delaying payouts for some customers. Motorists who think they are affected are advised to monitor the regulator’s announcements and prepare to provide documentation to support their claims.
For drivers, the key takeaway is that a formal path to compensation is approaching, but exact timelines and amounts may vary. While many will receive redress via the central scheme, others may choose to pursue separate legal action if they believe they can obtain a larger award.
