The City regulator has tightened the rules of a mass compensation scheme over the car finance sandal, with fewer than expected victims set to pocket £830 on average.
The Financial Conduct Authority (FCA) released the final details of its planned redress programme, saying it had narrowed the number of loan agreements eligible for payouts from 14m to 12.1m contracts.
That tweak, which covers loans agreed between 2007 and 2024, is expected to result in a higher payout for each contract, up from £700 to £830.
The FCA scheme is intended to draw a line under the car finance scandal, whereby drivers were overcharged for loans as a result of controversial commission payments between lenders and car dealers.
The FCA’s chief executive Nikhil Rathi said the final terms struck a balance for borrowers and banks, with lobbyists on both sides having complained about sums outlined in initial proposals that were put out for consultation in the final months of 2025.
“We’ve listened to feedback to make sure the scheme is fair for consumers and proportionate for firms. It will put £7.5 billion back into people’s pockets,” he said.
“Now we need everyone to get behind it and ensure millions get their money this year. Payouts should not be delayed any longer, especially as household bills come under greater pressure. Delivering compensation promptly also gives lenders the chance to rebuild trust, and means we can draw a line under the past and support a healthy motor finance market for the future.
“An industry-wide scheme is the most efficient way of compensating affected consumers while supporting the ongoing availability of competitively priced motor finance for millions who rely on it. Without such a scheme, the cost to lenders of dealing with complaints through the Ombudsman or courts is estimated to be over £6bn higher.”
More details soon …
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