Particle.news
Download on the App Store
14 ARTICLES
·
2h ago

FCA Unveils Motor Finance Redress Plan Costed at £8.2bn, Averaging £700 Per Deal

The consultation sets out who qualifies and a path to final rules in early 2026 with payments beginning later that year.

Image
Image
Image
Under so-called “discretionary” arrangements dealers received bigger commissions if customers paid a higher rate of interest, which were set by dealers

Overview

  • The proposed scheme covers agreements taken out between 6 April 2007 and 1 November 2024 where a lender paid commission to a broker or dealer.
  • Eligibility hinges on inadequate disclosure of at least one of three features: a discretionary commission arrangement, a high commission (over 35% of total credit cost and 10% of the loan), or a contractual tie between lender and broker.
  • The FCA estimates about 14.2 million agreements, roughly 44% of deals in scope, are likely unfair, with average compensation of around £700 per agreement and multiple agreements potentially yielding multiple payouts.
  • Lenders have until 18 November to respond, with the regulator aiming to publish final rules in early 2026 and begin payments later in 2026; people can complain to their lender now and do not need claims management firms.
  • The central redress estimate is £8.2bn, rising to up to £9.7bn at full take-up, and follows a Supreme Court ruling that narrowed hidden-commission claims but left room for unfair-relationship and high‑commission cases; several major lenders have already set aside funds.