Overview
- The FCA told MPs in testimony on June 9 that ongoing legal challenges are likely to push any compensation payments back to 2027 or later.
- The proposed mass scheme would cover about 12.1 million motor finance agreements with an average payout near £829 and an industry bill the FCA estimates at roughly £9.1 billion.
- Four separate legal challenges have been launched by lenders and other parties, and the FCA says courts could strike down parts or all of the plan, which would force a return to individual complaints handling.
- The regulator has already spent over £20 million building the programme, expects roughly £2.7 million more in legal costs, and is exploring options to get some consumers paid sooner while court cases proceed.
- The dispute centres on discretionary commission arrangements, where dealers or brokers could raise a borrower's interest rate to increase commission, and the FCA has warned that some claims management firms have signed up customers without clear consent and may take large fees.