The Financial Conduct Authority will set out the car finance mis-selling redress scheme after the markets close on Monday, March 30.
The Financial Conduct Authority will set out the car finance mis-selling redress scheme after the markets close on Monday, March 30.(Image: Burak Sür via Getty Images)
The Financial Conduct Authority (FCA) will set out its plans for a motor finance redress scheme after the markets close on Monday, March 30. Around 14 million people are due a share of the estimated £8.2 billion compensation payout, some £700 per mis-sold agreement, but it will be more or less depending on individual cases.
The redress scheme will cover car finance agreements taken out between April 6, 2007 and November 1, 2024. Earlier this month the FCA announced that millions of people with motor finance commission mis-selling claims going back as far as 2007 will receive compensation in 2026.
The City watchdog has previously said it is likely to make several changes to the proposed compensation scheme after receiving more than 1,000 responses to its consultation on the plans.
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The redress scheme is expected to give lenders a three-month implementation period to pay out compensation, with up to five months for older motor finance agreements.
People could be told within three months of the end of the implementation period whether they are owed compensation and how much, but could then accept immediately without waiting for a final determination.
Craig Tebbutt, a financial health expert for Equifax UK, said: “It has previously been estimated that average compensation levels could be in the region of £700 per agreement but the final details around the scale, scope and timelines are expected to be confirmed on Monday.
“However, there is nothing to stop consumers checking their paperwork now and getting their details ready in the meantime.”
He said research by the credit reporting firm found that “many consumers don’t know how to check their eligibility and expect the process to be a hassle, with old or missing paperwork being a real barrier”.
Equifax has launched a car finance checker within its new app that lets people see a list of their past agreements and copy the details, with motorists encouraged to send a complaint to their lender using a template on the FCA’s website if they think they’re eligible for a payout.
Lenders and car finance providers had been challenging the FCA’s proposals with some raising concerns that the expected amount of compensation is too high and does not accurately reflect what customers lost.
FCA streamlined compensation process for consumers and firms
- People who complain before the scheme starts would no longer be asked if they wish to opt out. Instead, within 3 months of the end of the implementation period, their lender would tell them whether they’re owed compensation, and how much.
- Consumers receiving a redress offer would be able to accept it immediately, rather than waiting for a final determination.
- Firms would not be required to write to customers via recorded delivery. We would allow a range of channels that best meet consumers’ needs with appropriate safeguards to prevent fraud.