The UK's Financial Conduct Authority (FCA) has received a significant boost for its £9.1 billion motor finance redress scheme after the main industry body and several major lenders decided not to mount a legal challenge.
The Finance and Leasing Association (FLA), which represents motor finance firms, said it had concerns about the scheme but chose not to challenge it. Similarly, Santander, Barclays, and Lloyds accepted the plan despite objections, preferring to provide certainty for customers and the market. Barclays warned the scheme could reduce credit availability and increase costs.
The FCA expects to pay out approximately £7.5 billion in redress to 75% of eligible consumers, with total costs reaching £9.1 billion. Claims are due on 12.1 million mis-sold deals, averaging £829 each. The watchdog anticipates most payments by the end of 2027.
However, consumer group Consumer Voice is preparing its own legal challenge, arguing the scheme may leave millions out of pocket. Analyst Gary Greenwood of Shore Capital Markets noted that such action could delay implementation and compensation payments.
