FCA sets final car finance compensation scheme for millions of UK motorists
The Facts
- The FCA has finalized a compensation scheme for motorists who were mis-sold car finance.
- About 12.1 million motor finance agreements are expected to be eligible under the final scheme.
- The FCA estimates average compensation at £829 per eligible agreement.
- The FCA expects total redress under the scheme to be about £7.5 billion.
- The scheme covers motor finance agreements made between 6 April 2007 and 1 November 2024.
- The FCA has split the compensation program into two schemes: one for agreements from 6 April 2007 to 31 March 2014, and another for agreements from 1 April 2014 to 1 November 2024.
- The final scheme covers fewer agreements than earlier FCA estimates, which had put the figure at about 14 million or 14.2 million agreements.
- The compensation relates to failures to properly disclose commission arrangements in car finance deals, including hidden commission arrangements.
Context
Who is covered by the scheme?
The scheme covers certain motor finance agreements made between 6 April 2007 and 1 November 2024 where commission was paid by lenders to brokers, with the FCA saying about 12.1 million agreements are eligible under the final rules Investing.com,Independent,Independent.
Why did the FCA split the compensation scheme into two parts?
The FCA said it created two schemes so that if lenders challenge its authority over older agreements, that dispute would not hold up compensation for newer agreements. One scheme covers 2007 to March 2014, and the other covers April 2014 to November 2024 BBC,Yahoo! Finance,Independent.
When might people receive compensation?
The FCA says millions of claims should be paid this year, with the vast majority expected to be settled by the end of 2027. Some reports also say affected customers should be contacted before the end of 2026 as firms work through the implementation timetable GB News,Independent,Independent.
The receipts — all 96 sources
Wire services (4)
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