London: 14.2M Motor Loans Deemed Unfair Under FCA Plan

 


The UK Financial Conduct Authority (FCA) has announced a proposal for an industry-wide compensation scheme to reimburse consumers who were mis-sold car finance deals between April 2007 and November 2024. 

14 Million Loans Potentially Affected

The regulator estimates that 14.2 million motor finance agreements—about 44% of such deals in that period—could be deemed unfair under the scheme.  On average, eligible consumers may receive a payout of £700 per affected loan. 

Mechanics, Timeline, and Consultation

The FCA is currently running a consultation on how the scheme should work, covering issues such as interest, eligible agreements, and administrative structure. Payouts are expected to begin in 2026, once the scheme is finalized and firms begin processing claims.

Banks Brace for Bigger Costs

Lenders such as Lloyds and Close Brothers have warned that the final cost could exceed current provisions. Lloyds has already flagged that its initial £1.2 billion reserve may prove insufficient. Close Brothers has also indicated it may raise its reserves above the existing £165 million. 

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