FCA Car Finance Update
Edited By Maj Hussain, Halal Incorp
The Financial Conduct Authority (FCA) has launched a consultation on a proposed redress scheme for motor finance customers who were unfairly treated between the years of 2007 & 2024.
Under this proposal, consumers might receive compensation where lenders or brokers failed to disclose commission arrangements, contractual ties or interest rate impacts which occured.
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The scheme would essentially apply to regulated motor finance agreements involving discretionary commission, high commission thresholds as well as exclusive ties.
Those that have been affected would be identified, contacted & invited to opt in (or excluded if previously compensated).
FCA Car Finance Update
Compensation would be calculated in relation to a mix of estimated overpayment & actual commission, along with interest.
Estimates might suggest up to 14.2 million agreements could fall into scope, with the average compensation being around £700 per agreement & a total redress of around £8.2 billion (assuming 85 % take-up).
The consultation closes on 18 November 2025, with the FCA aiming to finalise rules and launch the scheme in 2026.
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