UK’s FCA Orders 11 Billion Pound Compensation Scheme For Mis-Sold Car Loans

The UK’s Financial Conduct Authority (FCA) has outlined a compensation scheme for 14 million car finance agreements sold through discretionary commission arrangements between 2007 and 2024.

Lenders could face total costs of 11 billion pounds, including 8.2 billion pounds in compensation and 2.8 billion pounds in administrative expenses.

The FCA estimates average payouts of 700 pounds per agreement, though amounts will vary. The scheme targets cases where dealers set interest rates to earn higher commissions, leading to inflated costs for buyers. Payments are expected to begin next year. Consumers who have already complained will be contacted first, while others will be invited to opt in within six months of the scheme’s launch. FCA chief Nikhil Rathi said the goal is to ensure fair compensation for affected customers. The regulator plans an awareness campaign to inform eligible motorists.