Car finance victims to get £830 payout on average as FCA tightens eligibility
Car finance victims to get £830 payout on average as FCA tightens eligibility
FCA finalises car finance redress, narrowing eligible contracts to 12.1m and lifting average payout to £830 amid the mis-selling scandal.
Victims of the car finance scandal will receive an average payout of £830 after the Financial Conduct Authority finalised its redress scheme. The regulator narrowed the number of loan agreements eligible for compensation from about 14 million to 12.1 million contracts, covering loans agreed between 2007 and 2024. The change is expected to lift the average payout per contract, including interest, to £830.
Total compensation is forecast to reach roughly £7.5bn, down from £8.2bn outlined in the FCA's initial proposals. Some analysts had forecast figures as high as £44bn at the peak of interest in the case, underscoring the scale of the mis-selling crisis and the need to restore trust in the motor finance market.
FCA chief executive Nikhil Rathi said the final terms balance borrowers and firms. “We’ve listened to feedback to make sure the scheme is fair for consumers and proportionate for firms. It will put £7.5bn back into people’s pockets,” he said. “Now we need everyone to get behind it and ensure millions get their money this year.”
Rathi fired warning shots at firms considering challenging the regulator’s scheme through the courts, stressing that payouts should not be delayed as household bills come under greater pressure. Delivering compensation promptly also gives lenders the chance to rebuild trust and draw a line under the past, supporting a healthy motor finance market for the future.
The scheme is designed to be fair for consumers and proportionate for firms, the regulator said, aiming to bring a long-running controversy to a close and provide relief to millions of drivers who were affected by mis-sold car finance.
