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Motor vehicle drivers

FCA Announces Industry-Wide Compensation Scheme for Motor Finance Customers

Strategic Insights

— 1 min read

The Financial Conduct Authority (FCA) is set to launch a consultation on an industry-wide compensation scheme for motor finance customers who were not provided with relevant information about commission paid by lenders to car dealers. The scheme aims to compensate customers who were misled about commission arrangements, with the FCA estimating that most individuals will receive less than £950 in compensation. The total cost of the scheme is estimated to be between £9 billion and £18 billion.

Key Takeaways:

  • The FCA will consult on an industry-wide compensation scheme for motor finance customers who were not provided with relevant information about commission paid by lenders to car dealers.
  • The scheme aims to compensate customers who were misled about commission arrangements, with the FCA estimating that most individuals will receive less than £950 in compensation.
  • The total cost of the scheme is estimated to be between £9 billion and £18 billion.
  • The scheme will be designed to be fair and easy to participate in, with no need to use a claims management company or law firm.
  • Nikhil Rathi, chief executive of the FCA, stated that the aim is to provide compensation to customers without causing them significant additional costs.
  • The consultation on the scheme will be launched by early October.
  • If the scheme goes ahead, the first payments should be made in 2026.

Statistics:

  • Most individuals are estimated to receive less than £950 in compensation.
  • The total cost of the scheme is estimated to be between £9 billion and £18 billion.
  • The consultation on the scheme will be launched by early October.
  • The first payments under the scheme are expected to be made in 2026.

Sources:

  • PA & Olivia Williams (no date) "Drivers could still receive £950 in compensation under FCA scheme"
  • FCA (no date) ( cited in PA & Olivia Williams) "FCA sets out plan for industry-wide compensation scheme for motorists"
  • Supreme Court (no date) (cited in FCA) "Supreme Court ruling on motor finance cases"

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