Overview

• Under the FCA proposal, about 14.2 million motor finance agreements from 6 April 2007 to 1 November 2024 involving lender-paid broker commissions could qualify, including discretionary commission arrangements banned in 2021.
• Estimated sector costs span roughly £8.2bn at expected participation to about £11bn–£12.4bn in higher take-up scenarios, with average compensation near £700 per agreement.
• Lloyds lifted its total provision to around £1.95bn after reviewing the plan, saying the FCA’s redress methodology overstates loss and conflicts with the Supreme Court’s recent fact-specific fairness approach.
• Other lenders and captives have also reserved funds, with BMW Financial at £200m and Hyundai Capital UK and Honda Finance Europe setting aside tens of millions, as industry bodies prepare formal responses to the consultation.
• The draft scheme would see lenders contact prior complainants first and approach other eligible customers within set timeframes, while consumers are warned that using claims firms can incur sizable fees that reduce payouts.