Archive · 4 Aug 2025
FCA Announces Payout Scheme for Mis-sold Car Finance
The UK's financial watchdog is planning a compensation scheme for people mis-sold car loans.
Although a recent court decision helped lenders, the FCA will still create a plan to pay back affected customers.
This is due to how some car loans worked, where brokers earned more by giving customers higher interest rates.
The plan aims to help those unfairly charged, with payments expected next year and potentially costing banks billions of pounds.
The maximum payout is expected to be £950.
FCA will consult on a payout scheme for customers mis-sold car finance.
The Supreme Court ruled in favor of lenders, reducing potential payouts.
The ruling follows a court case regarding discretionary commission arrangements.
The FCA estimates the cost to industry could be between £9 billion and £18 billion.
Eligible customers may receive up to £950 in compensation.
- Who
- The UK's Financial Conduct Authority (FCA).
- What
- FCA is consulting on a payout scheme for mis-sold car finance.
- When
- Consultation starts in October, with first payments expected next year.
- Where
- UK
- Why
- To compensate customers who were overcharged due to commission arrangements.
Customers
Lenders
Compensation Responsibility
Customers
Customers deserve compensation for being overcharged on loans.
Lenders
The industry should not be solely responsible for these compensation payouts.
- Potential Payout Range
- £9 billion - £18 billion
- Maximum Individual Payout
- £950
- Affected Loans
- Car finance with discretionary commission arrangements
- Court Ruling
- Supreme Court ruled in favor of lenders
- Key Regulator
- Financial Conduct Authority (FCA)
