Compensation payouts for drivers who were mis-sold car finance deals are expected to cover around 12.1 million people, with an average of £829 each.
Car finance scandal
The Financial Conduct Authority (FCA) stated on Monday (30.03.26) that millions of UK motorists who signed car finance agreements between 6 April 2007 and 1 November 2024 will be eligible for compensation.
The City watchdog estimates 75% of eligible drivers will take part, which will result in lenders paying redress of £7.5 billion. Additional non redress costs are estimated to be £1.6 billion, taking the likely total bill to £9.1 billion.
Courts have found that lenders and firms “broke the law by failing to disclose important information to customers”, leading them to be overcharged or having to pay unfair commission.
The FCA has received more than 1,000 consultation responses followed an outlined a proposed compensation scheme last October. Early estimates indicated 14 million unfair motor finance deals, at an average of about £700 each.
The regulator is now working to finalise the details of the redress scheme and a decision is expected later this year. If approved, payments could begin within 2026.
However, the motor finance industry has raised concern over the new plans, with lenders warning that the scale of compensation could have a significant financial impact for the sector.
The regulator said the scheme is shaped to make it easier for consumers to receive the payout without having to submit a claim themselves. Therefore, lenders must identify affected customers and issue payments.
This way, motorists affected should have been contact by December 2026. According to the FCA, those who have not been contact but believe they were affected have until 31 August 2027 to make a complain.
Drivers who believe they may have been affected but have not been contacted have until 31 August 2027 to complain to their firm.