The Financial Conduct Authority (FCA) will publish final details
Millions of drivers in line for an average payout of £700 will get final details on Monday. It relates to those who were mis-sold car loans and are set to discover how they’ll be reimbursed, as the finance regulator unveils its final blueprint for an industry-wide compensation programme.
The Financial Conduct Authority (FCA) will publish its definitive decisions on the long-awaited scheme on Monday afternoon. The watchdog outlined provisional plans last year, but is expected to make several amendments following more than 1,000 responses to its consultation.
According to the latest proposals, the scheme will encompass car finance deals struck between April 6, 2007, and November 1, 2024. The FCA calculated that approximately 14 million agreements, representing 44 per cent of all those arranged since 2007, were unfair and thus qualify for compensation.
Motorists were projected to receive an average of £700 per agreement, though this figure will differ based on individual circumstances. The total cost to the industry was forecast at £11 billion, incorporating both the overall payouts and the operational expenses of administering the scheme.
Craig Tebbutt, a financial health specialist at Equifax UK, said: “It has previously been estimated that average compensation levels could be in the region of £700 per agreement, but the final details around the scale, scope and timelines are expected to be confirmed on Monday. However, there is nothing to stop consumers checking their paperwork now and getting their details ready in the meantime.”
He explained that research by the credit reporting firm revealed that “many consumers don’t know how to check their eligibility and expect the process to be a hassle, with old or missing paperwork being a real barrier”.
Equifax has introduced a car finance checker in its new app, enabling users to view a list of their previous agreements and copy the information. Motorists who believe they’re entitled to compensation are being urged to lodge a complaint with their lender using a template available on the FCA’s website.
Lenders and car finance companies had been contesting the FCA’s proposals, with some expressing worries that the anticipated compensation amounts are too generous and don’t accurately reflect customers’ actual losses.
Conversely, some consumer groups and MPs have contended that numerous motorists will be left out of pocket under the current proposals.
The FCA has already announced several modifications to the process since the proposals were first unveiled last year. These include providing lenders with additional time to reach out to motor finance customers once the scheme officially launches.
However, it’s also working to simplify the process by permitting those eligible for redress to accept it straight away without having to wait for a final decision.
The regulator believes this approach means millions of people could receive compensation in 2026.
