Carmakers are scrambling to raise £3bn to cover payouts for motor finance scandal victims after failing to adequately prepare for a UK-wide compensation scheme due to begin this summer, company filings show.
The Financial Conduct Authority (FCA) has estimated that about 42% of the total £9.1bn redress bill will be shouldered by car manufacturers' motor financing divisions. However, manufacturers have collectively set aside just £897m, leaving a £3bn shortfall.
The compensation scheme is intended to compensate drivers who were mis-sold car loans between 2007 and 2024, with average payouts of £830. Lenders not tied to carmakers, including high street banks, have already provisioned £3.9bn of their expected £5.2bn bill.
Mercedes-Benz has put aside the largest sum among carmakers at £424m, followed by BMW (£207m), Ford (£155m), Renault (£74m) and Stellantis (£37m). Volkswagen and Ferrari appear to have set aside no funds. The FCA declined to comment on the shortfall.
Lenders and consumer groups have until 27 April to challenge the FCA's scheme, which could delay payouts. Carmakers have lobbied regulators, warning that large payouts could force some providers to withdraw loans or collapse.
