Fiat Chrysler Automobiles (FCA) unveils a car finance compensation plan, potentially resulting in hefty compensation for numerous motorists nationwide.
The Financial Conduct Authority (FCA) has announced plans for an industry-wide redress scheme for consumers who were mis-sold car finance deals. This comes after the Supreme Court's ruling against car buyers in the car finance scandal.
The proposed scheme will be designed to offer fairness and certainty to both customers and firms. It will primarily apply to consumers who took out regulated motor finance agreements before 28 January 2021, as discretionary commission arrangements (DCAs) were banned from this date.
The FCA will consider several key factors for car finance customers to be eligible for compensation. These include the type and date of the agreement, the nature of vehicle use, disclosure of discretionary commission arrangements, non-discretionary commission, proof of harm and redress calculation, interest on redress, and claims on behalf of deceased customers.
If a consumer's relationship with the finance company was found to be 'unfair' due to non-disclosure of factors identified by the Supreme Court, they may be eligible for compensation, which could include the amount of commission plus interest.
The total cost of the compensation scheme is expected to rise above £9 billion, according to accountancy firm BDO. However, most individuals are likely to receive less than £950 in compensation.
The FCA's review of past motor finance deals showed that many firms were not complying with the law or disclosure rules when selling loans to consumers. Some car finance firms failed to provide customers with relevant information about commission paid by lenders to car dealers who sold the loans.
The consultation for the compensation scheme will launch by early October, and if approved, the first payments should be made in 2026. People who have already complained don't need to do anything, but anyone who is concerned they were not told about commission and thinks they may have paid too much for their car finance lender should complain now.
The FCA's consultation on the redress scheme will provide clarity on what is considered unfair in the car finance industry. The scheme aims to be consumer-friendly, avoiding the need for claims management companies and encouraging direct complaints to finance providers first.
References: - MoneySavingExpert, "Car finance FREE reclaim tool & guide," 2025-08-06 - Sky News, "Martin Lewis reveals who is due for car finance compensation," 2025-08-04 - FCA, "FCA to consult on a compensation scheme for motor finance customers," 2025-08-04 - The Independent, "Car finance mis-selling: How can I claim compensation and am I eligible," 2025-08-02
- The Financial Conduct Authority's (FCA) proposed redress scheme will primarily focus on consumers who took out car finance deals before 2021, following the Supreme Court's ruling on the car finance scandal.
- The compensation scheme, set to launch in 2026, is designed to offer fairness and certainty to both customers and car finance firms, addressing the lack of transparency and compliance issues uncovered by the FCA's review.
- Eligibility for compensation is contingent on factors such as the type and date of the agreement, disclosure of discretionary commission arrangements, and proof of harm, among others, as outlined by the FCA.
- If found that a consumer has been unfairly treated due to non-disclosure of specified factors, they may be eligible for compensation, potentially including the amount of commission plus interest, according to the FCA.
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