The financial regulator has finally unveiled its long-awaited compensation scheme for millions of Britons affected by unfair car loan practices. After years of investigation, authorities have confirmed who will receive payouts and how much they can expect.
Who Qualifies for Compensation?
Eligibility extends to consumers who took out car loans between 2007 and 2021, particularly those sold expensive add-ons like payment protection insurance or gap insurance without proper explanation of costs. The Financial Conduct Authority estimates around 2.5 million people may be entitled to compensation.
How Much Will Borrowers Receive?
Payouts will vary significantly based on individual circumstances:
- Average compensation expected to be £1,200-£1,500
- Some cases could receive over £5,000
- Minimum payout set at £250
The exact amount depends on factors like the loan size, duration, and specific unfair practices identified in each case.
When Will Payments Arrive?
The phased compensation process will begin in early 2026, with all valid claims processed by mid-2027. Borrowers don't need to take immediate action - lenders will contact eligible customers directly.
What This Means for the Industry
This settlement marks one of the largest consumer redress schemes in UK financial history, potentially costing lenders over £3 billion. Experts warn it may lead to stricter regulations on motor finance and more transparent pricing structures.
Consumer groups have welcomed the announcement but urge borrowers to remain vigilant for scams offering to 'fast-track' claims for a fee.
