The Financial Conduct Authority (FCA) has published final details of its compensation scheme for victims of the car finance scandal, with average payouts expected to be £830 per eligible loan agreement. The scheme covers loans agreed between 2007 and 2024, but the regulator has narrowed the number of eligible contracts from 14 million to 12.1 million.
The FCA estimates that roughly 75% of eligible consumers will make a claim, resulting in total compensation of approximately £7.5 billion from lenders. This is lower than the £8.2 billion outlined in initial proposals and far below the £44 billion forecast by some analysts at the peak of the scandal last year.
FCA chief executive Nikhil Rathi said the final terms struck a balance between borrowers and banks, noting that feedback from both sides had been considered. “We’ve listened to feedback to make sure the scheme is fair for consumers and proportionate for firms. It will put £7.5bn back into people’s pockets,” he said. Rathi warned firms against challenging the scheme in court, stating that payouts should not be delayed.
Under current plans, millions of victims are expected to receive compensation by the end of 2026. However, firms have until 5pm on 27 April to challenge the scheme, which could delay payouts. The Financing and Leasing Association (FLA) has not ruled out legal action, while claims law firm Courmacs Legal criticised the scheme as a “complete failure for consumer rights”.
Close Brothers, one of the most exposed lenders, is among those assessing the terms. The FCA and lenders have warned consumers against using claims management companies, which charge fees of up to 33% of payouts, while the FCA scheme is free.
