Millions of Drivers Set for Big Payday Over Mis-Sold Car Finance
12.1 Million Motor Finance Deals to Get Cash Back
The Financial Conduct Authority (FCA) has confirmed around 12.1 million car finance deals will qualify for compensation – down from 14 million originally expected. But don’t be fooled by the drop in numbers. The average payout per motorist has jumped to a hefty £829, up from the initial £700 estimate. Payments will start hitting bank accounts later this year.
£7.5 Billion Price Tag as Lenders Brace for Big Bill
Car finance firms are now staring down a £7.5 billion compensation bill, slightly less than the £8.2 billion previously predicted. Thanks to tighter FCA rules narrowing the scheme’s scope, lenders’ overall tab has been slashed from £11 billion to £9.1 billion.
Who’s Getting the Cash? The Lowdown
- Deals made between April 6, 2007, and November 1, 2024 are eligible.
- Loans where lenders paid secret commissions to brokers are in the firing line.
- The FCA is running two schemes: one covering 2007-2014 deals, another for 2014-2024 agreements.
The watchdog’s investigation uncovered a dirty secret: brokers quietly inflated interest rates on car loans to rake in undisclosed commissions. These “discretionary commission arrangements” were banned in 2021 after being branded unethical.
Supreme Court Ruling Sparks Massive Redress Scheme
The FCA’s crackdown follows a landmark Supreme Court ruling in August 2025, which slammed hidden commission fees as unfair and possibly illegal. Thousands of unsuspecting drivers ended up paying inflated rates, lining dealers’ pockets.
After sifting through over 1,000 responses to last year’s consultation, the FCA finalised the compensation plan.
“Individual payouts will vary depending on the loan size and commission involved,” the FCA warned. “Some motorists could get more or less than the average £829.”
This crackdown is one of the biggest consumer compensation efforts in UK finance history — finally holding the car finance industry to account for dodgy deals and sneaky fees.
