FCA proposes £8.2bn UK car finance compensation scheme for 14 million drivers

Millions of UK drivers who purchased cars on finance between 2007 and 2024 could be eligible for compensation averaging around £700 due to unfair car finance deals, according to the Financial Conduct Authority (FCA). The FCA has identified approximately 14 million agreements that included undisclosed discretionary commission arrangements, leading many customers to pay higher interest rates without proper knowledge. The regulator estimates lenders may owe up to £8.2 billion in total compensation, with around 44% of 32 million agreements investigated potentially qualifying for payouts. The FCA plans to launch a compensation scheme early next year, requiring lenders to contact affected customers and urging consumers to directly approach their lenders or brokers without involving claims management companies to avoid fees. Financial expert Martin Lewis has highlighted the importance of consumers opting into the scheme and using available online complaint templates to claim their money, noting that some individuals may have multiple eligible loans. Overall, this initiative aims to rectify widespread non-disclosure by motor finance firms and ensure fair treatment for millions of car buyers.