Need to know
The Financial Conduct Authority has announced compensation scheme details covering motor finance agreements missold between 2007 and 2024, with average payouts of around £830
FCA rule 12m drivers eligible for £830 compensation over car finance claims(Image: Photographer, Basak Gurbuz Derman via Getty Images)
Need to know: Massive £7.5 Billion Car Finance Mis-Selling Compensation Scheme Announced
- The Financial Conduct Authority has announced a massive £7.5 billion compensation scheme for over 12 million car finance agreements mis-sold between 2007 and 2024.
- The average payout has increased to around £830 per agreement, higher than the originally proposed £700. The FCA estimates that 75% of eligible consumers will make a claim, making this one of the financial sector’s biggest compensation schemes.
- FCA chief executive Nikhil Rathi said: “We’ve listened to feedback to make sure the scheme is fair for consumers and proportionate for firms. It will put £7.5billion back into people’s pockets.”
- Consumer champion Martin Lewis warned that people will “have no idea” if they were mis-sold car finance unless they complain. He urged consumers to “put a complaint in” to ensure they’re in the “complained camp” for faster compensation.
- The scheme covers motor finance agreements where commission was paid by lenders to brokers – often car dealers – but this wasn’t disclosed to buyers. The FCA found this led to unfairness, with consumers denied the chance to negotiate better deals.
- Eligible agreements run from April 6, 2007 to November 1, 2024, covering both new and second-hand cars. Implementation periods vary, with compensation starting by June 30 for post-2014 agreements and August 31 for earlier ones.
- READ THE FULL STORY: FCA rule 12m drivers eligible for £830 compensation over car finance claims
- Anyone not contacted by lenders has until August 31, 2027 to make a claim, with the total industry costs expected to reach around £11 billion including additional expenses.
