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MILLIONS of drivers waiting for £800 car finance compensation are facing delays as the watchdog has been hit with a legal challenge over the scheme.
Consumer Voice claims millions could be left out of pocket by the Financial Conduct Authority’s (FCA) scheme, which is expected to cost lenders embroiled in the scandal £9.1billion.
Under the City watchdog’s plans, victims were due to receive payouts averaging £829 per person by this summer.
Around 12.1million drivers who were mis-sold agreements between April 6, 2007, and November 1, 2024 are eligible.
However, these payments could now be delayed because of the legal challenge.
Alex Neill, co-founder of consumer rights organisation Consumer Voice, said: “We are taking this unprecedented step to challenge the regulator’s redress scheme because it doesn’t deliver fair or lawful compensation for drivers.
“We support a redress scheme being put in place, but as it stands millions of people will be under-compensated, and the lenders involved in this scandal won’t be meaningfully held to account.
“The FCA has designed a scheme that leaves ordinary motorists hundreds of pounds per claim out of pocket. That cannot be left unchallenged.”
He added: “Consumers have been let down by the lenders who mis-sold them car finance. They should not be let down again by the regulator that is meant to protect them.
“The FCA must fix the scheme and deliver the fair redress that millions of UK motorists are owed.”
It comes after a major bank, FirstRand, announced it is quitting the UK over its massive car finance compensation bill.
It hit out at the “disproportionate and unfair” scheme, after it was landed with a £750million bill, and put up its UK bank Aldermore and MotoNovo Finance for sale.
A spokesperson for the FCA said: “Our scheme is the quickest, fairest way to compensate consumers.
“It seems contradictory that organisations claiming to represent consumers would seek to delay payouts for millions of people.”
Q&A
Who is eligible for the cash?
You are likely eligible if you took out a motor finance loan between April 6, 2007, and November 1, 2024, and weren’t told about certain commission deals.
This includes “discretionary commission arrangements” where dealers hiked interest rates to get a bigger kickback, or high commission deals where the payout was at least 39% of the credit cost.
Loans with 0% APR or very low interest are generally excluded.
How much can I get?
The FCA says the average payout is around £829 per agreement.
For most, this is calculated by looking at the commission paid and the “estimated loss” from the inflated interest rate.
Those with older loans (pre-2014) may get slightly more as losses were higher then.
In about 1 in 3 cases, payouts will be capped to make sure you aren’t “put back in a better position” than if you’d been treated fairly in the first place.
Do I need to make a claim?
If you haven’t complained yet, you don’t necessarily need to rush.
Lenders must contact you if they think you are “likely to be owed money.”
However, those who have already complained or do so before the implementation deadlines in mid-2026 will be compensated sooner.
If you aren’t contacted, you have until August 31, 2027, to put in a claim.
When will I be paid?
Millions are expected to get their money this year.
Lenders have a deadline of June 30, 2026, to prepare for newer loans, and August 31, 2026, for older ones.
Once those dates pass, firms have three months to tell you if you’re getting a payout.
Most remaining claims should be settled by the end of 2027.
Should I use a claims firm?
The FCA says there is “no need” to use a claims management company or a law firm.
The scheme is designed to be free and easy to use.
If you use a firm, they could take a massive chunk of your cash – potentially over 30% of your total payout.
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