Car finance victims to get an average £830 payout but fewer loans eligible | Motor finance

The council regulator has tightened the rules of its lump sum compensation scheme through the car finance sandal, with victims pocketing an average of £830 less than expected.

The Financial Conduct Authority (FCA) has published the final details of its planned remediation programme, saying it has reduced the number of loan deals eligible for payment from 14 million contracts to 12.1 million contracts.

This arrangement, which covers loans agreed between 2007 and 2024, is expected to result in a higher payout of £700 to £830 per contract.

The FCA plan is intended to draw a line at the car finance scandal, which has seen drivers overcharged for loans as a result of disputed commission payments between lenders and car dealers.

Nikhil Rathi, the FCA’s chief executive, said the final terms struck a balance for borrowers and banks, with lobbyists on both sides complaining about sums set out in initial proposals submitted for consultation in the final months of 2025.

“We’ve listened to feedback to make sure the plan is fair for consumers and proportionate for firms. This will put £7.5bn back into people’s pockets,” he said.

“We need everyone to get behind this now and ensure millions get their money this year. Payments must not be delayed further, especially when household bills are under further pressure. Prompt compensation also gives lenders the chance to rebuild trust, meaning we can draw a line under the past and support a healthy automotive finance market for the future.”

“An industry-wide scheme is the most effective way to compensate affected consumers while supporting the continued availability of competitively priced motor finance for the millions of people who rely on it. Without such a programme, the cost to lenders of dealing with complaints through the Ombudsman or the courts is estimated to be more than £6bn.”

More details coming soon…