The Financial Conduct Authority (FCA) will launch a consultation on a redress programme for car finance mis-selling, enabling motor finance customers to claim compensation for undisclosed commissions. Estimates propose costs for finance providers could reach up to £18 billion. Discretionary commission arrangements led to conflicts of interest, often resulting in consumers overpaying for loans. The FCA advises customers to submit complaints, emphasizing the simplicity of the process. The consultation is set for early October, with potential payouts beginning in 2026, averaging under £950 per individual depending on their specific cases.
Nikhil Rathi, Chief Executive of the FCA, stated, "It's clear that some firms have broken the law and our rules. It's fair for their customers to be compensated."
The FCA estimates the scheme could cost motor finance providers between £9 billion and £18 billion, a substantial figure, though lower than the previously feared £30 billion.
Discretionary commission arrangements (DCAs), banned by the FCA in 2021, created conflicts of interest that often left consumers unknowingly overpaying.
The consultation will launch by early October, with final proposals expected in early 2026. If approved, the FCA says redress payments could begin later in 2026.
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