Millions of motorists could be owed compensation of up to £950 each as the car finance scandal continues, according to the Financial Conduct Authority (FCA). On Sunday, the FCA confirmed it would now consult on an industry-wide compensation scheme after the Supreme Court’s ruling last week.
The Supreme Court refused to uphold a Court of Appeal ruling over car finance firms, saving lenders from paying out a possible £44billion compensation package. However, the Court ruled that in some circumstances, lenders who had failed to disclose commission arrangements may have been unfair. It means road users who obtained vehicles under finance deals from between 2007 and 2021 may be affected on a case-by-case basis. Martin Lewis has even claimed it is “very likely” that about 40% of Britons who entered personal contact purchase or hire purchase agreements could be eligible for the payouts.
The FCA has been working hard on a proposed compensation scheme for petrol, diesel and electric car owners who fall into this category, with hundreds of pounds per driver set to be awarded.
Experts at the FCA estimate that most motorists are likely to receive less than £950 in compensation per agreement. However, the FCA confirmed the final cost of any compensation scheme will depend on the final design.
Nikhil Rathi, chief executive of the FCA, stressed the new compensation scheme will be “fair and easy” for road users to access.
Nikhil explained: “It is clear that some firms have broken the law and our rules. It’s fair for their customers to be compensated. We also want to ensure that the market, relied on by millions each year, can continue to work well and consumers can get a fair deal.
“Our aim is a compensation scheme that’s fair and easy to participate in, so there’s no need to use a claims management company or law firm. If you do, it will cost you a significant chunk of any money you get.
“It will take time to establish a scheme but we hope to start getting people any money they are owed next year.”
However, road users will still be waiting months to receive any money with the scandal set to continue. The FCA confirmed that their consultation into a redress scheme is set to launch by early October.
If the compensation scheme does go ahead, the first payments would likely be made to road users in early 2026. The FCA stressed drivers who have already complained to their lender do not need to do anything else at this stage.
Meanwhile, consumers who are concerned that they were not told about the commission should issue a complaint now.