FCA Examines 30m Car Loans for Mis-Selling Compensation Payments
ByAinvest
Tuesday, Sep 9, 2025 3:32 pm ET1min read
SAN--
The investigation comes in the wake of a Supreme Court ruling in August, which deemed one out of three linked cases unfair due to the size of commissions paid to car dealers and the lack of adequate disclosure [1]. This ruling has set a higher bar for redress than lenders had anticipated, potentially leading to significant compensation payouts.
The FCA has proposed a redress scheme for motorists who were sold unfair motor loans, with an estimated cost of between £9 billion and £18 billion ($12.2 billion-24.4 billion) [1]. The scheme is expected to launch in 2026, with eligible consumers receiving compensation by that year [1].
Some lenders, such as Lloyds Banking Group (LLOY), Close Brothers (CBG), Barclays (BARC), and the UK arms of Santander (SAN) and Bank of Ireland (BIRG), have already set aside nearly £2 billion to cover potential motor finance compensation claims [1]. The FCA has warned that lenders claiming to have lost customer records about mis-sold car loans will be challenged to ensure they get their fair share of the compensation pot [2].
The FCA's announcement has sparked debate among industry experts and lawmakers. The Financing and Leasing Association, representing car lenders, has threatened to challenge the FCA's compensation scheme in court if it ends up handing "disproportionate" payouts to drivers [2]. Despite these concerns, the FCA remains committed to ensuring that consumers receive fair compensation for mis-sold car loans.
References:
[1] Reuters. (2025). UK watchdog examines 30 million car finance deals for compensation scheme. Retrieved from https://www.tradingview.com/news/reuters.com,2025:newsml_L5N3UW0QT:0-uk-watchdog-examines-30-million-car-finance-deals-for-compensation-scheme/
[2] The Guardian. (2025). FCA car finance firms compensation scheme car loans. Retrieved from https://www.theguardian.com/business/2025/sep/09/fca-car-finance-firms-compensation-scheme-car-loans
The Financial Conduct Authority (FCA) is investigating 30 million car finance loans taken out between 2007 and 2020 to determine if they qualify for mis-selling compensation payments. FCA Chief Executive Nikhil Rathi stated that not all loans will qualify, but around 14 million are likely eligible. The agency is assessing the scale of a compensation scheme set to launch in 2026.
The Financial Conduct Authority (FCA) has begun an investigation into 30 million historic car finance agreements, taken out between 2007 and 2020, to assess the eligibility for mis-selling compensation payments [1]. The regulator's Chief Executive, Nikhil Rathi, informed the Treasury Select Committee that not all loans will qualify, but approximately 14 million are likely to be eligible [2].The investigation comes in the wake of a Supreme Court ruling in August, which deemed one out of three linked cases unfair due to the size of commissions paid to car dealers and the lack of adequate disclosure [1]. This ruling has set a higher bar for redress than lenders had anticipated, potentially leading to significant compensation payouts.
The FCA has proposed a redress scheme for motorists who were sold unfair motor loans, with an estimated cost of between £9 billion and £18 billion ($12.2 billion-24.4 billion) [1]. The scheme is expected to launch in 2026, with eligible consumers receiving compensation by that year [1].
Some lenders, such as Lloyds Banking Group (LLOY), Close Brothers (CBG), Barclays (BARC), and the UK arms of Santander (SAN) and Bank of Ireland (BIRG), have already set aside nearly £2 billion to cover potential motor finance compensation claims [1]. The FCA has warned that lenders claiming to have lost customer records about mis-sold car loans will be challenged to ensure they get their fair share of the compensation pot [2].
The FCA's announcement has sparked debate among industry experts and lawmakers. The Financing and Leasing Association, representing car lenders, has threatened to challenge the FCA's compensation scheme in court if it ends up handing "disproportionate" payouts to drivers [2]. Despite these concerns, the FCA remains committed to ensuring that consumers receive fair compensation for mis-sold car loans.
References:
[1] Reuters. (2025). UK watchdog examines 30 million car finance deals for compensation scheme. Retrieved from https://www.tradingview.com/news/reuters.com,2025:newsml_L5N3UW0QT:0-uk-watchdog-examines-30-million-car-finance-deals-for-compensation-scheme/
[2] The Guardian. (2025). FCA car finance firms compensation scheme car loans. Retrieved from https://www.theguardian.com/business/2025/sep/09/fca-car-finance-firms-compensation-scheme-car-loans
Stay ahead of the market.
Get curated U.S. market news, insights and key dates delivered to your inbox.
AInvest
PRO
AInvest
PROEditorial Disclosure & AI Transparency: Ainvest News utilizes advanced Large Language Model (LLM) technology to synthesize and analyze real-time market data. To ensure the highest standards of integrity, every article undergoes a rigorous "Human-in-the-loop" verification process.
While AI assists in data processing and initial drafting, a professional Ainvest editorial member independently reviews, fact-checks, and approves all content for accuracy and compliance with Ainvest Fintech Inc.’s editorial standards. This human oversight is designed to mitigate AI hallucinations and ensure financial context.
Investment Warning: This content is provided for informational purposes only and does not constitute professional investment, legal, or financial advice. Markets involve inherent risks. Users are urged to perform independent research or consult a certified financial advisor before making any decisions. Ainvest Fintech Inc. disclaims all liability for actions taken based on this information. Found an error?Report an Issue
Comments
No comments yet