The FCA estimates around 14 million deals were unfair and could be eligible for compensation
The FCA will issue an important car finance update on Monday(Image: Getty)
Millions of drivers will find out details of a long-awaited car finance compensation scheme on Monday.
The payouts would cover mis-sold car finance agreements that were taken out between April 6, 2007 and November 1, 2024.
You may have been mis-sold if your agreement had a discretionary commission arrangement, a high rate or commission, or a contractual tie that you were not properly told about.
The Financial Conduct Authority (FCA) estimates around 14 million deals were unfair and could be eligible for compensation.
It previously said drivers could get an average of £700 back per agreement, but it may be more or less depending on individual circumstances.
This was expected to come at a total cost of £11billion to the industry, including total payouts and operational costs.
Lenders and car finance providers had been challenging the FCA proposals with some raising concerns that the expected amount of compensation is too high.
The final details of the scheme will be announced by FCA on Monday after markets close. The regulator set out draft plans last year but warned it could make changes after receiving more than 1,000 responses to its consultation.
The FCA has urged people who may be affected to put in a complaint to the lender that provided the car finance.
Consumer rights experts including Martin Lewis say there is no need to use a claims management company or law firm, as these will take 30% of any compensation owed to you.
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.”
Last month, the FCA said it expects to give lenders a three-month implementation period to pay out redress, with up to five months for older motor finance agreements.
If you have already complained, you would get told within three months of the end of the implementation period whether you are owed compensation and how much.
You would then be asked if you accept the figure, and then paid the money owed. The FCA previously said this should happen by the end of 2026.
The FCA also said last month that it plans to no longer ask drivers if they wish to opt out of the scheme, and will not require lenders to write to customers by recorded delivery.