LONDON, March 30, 2026, 12:11 BST
Britain’s Financial Conduct Authority is due after markets close on Monday to set out how millions of motorists can seek compensation over mis-sold car loans, with lenders and carmakers’ finance arms bracing for one of the country’s costliest consumer redress exercises. The watchdog has said it will publish its approach shortly after the London close on March 30. 1
The stakes are large. The FCA has said its proposed scheme could cover about 14 million agreements written between April 6, 2007 and Nov. 1, 2024, with average compensation of about 700 pounds per deal. It has previously put the payout bill at 8.2 billion pounds and the broader cost to firms at roughly 11 billion pounds once implementation is included. 2
At the centre are commission arrangements that many borrowers were not properly told about. The FCA says some lenders and brokers used discretionary commission arrangements, a now-banned setup that let dealers raise the interest rate to earn more, and the proposed redress also reaches some high-commission and tied-lender deals in hire purchase and Personal Contract Purchase, or PCP, agreements. A PCP is a car finance contract with monthly payments and the option to buy the vehicle at the end. 3
The watchdog has already sketched out the likely timetable. If it proceeds, firms would get three months to build the scheme and as much as five months for older agreements, while people who have already complained should be handled first. The FCA still says millions could receive compensation in 2026. 4
The industry is already taking provisions. The Times reported on Monday that Ford’s UK-based FCE Bank had lifted its reserve for motor finance redress to 155 million pounds from 61 million pounds. Ford’s European finance business is run mainly through FCE Bank in Britain, company filings show. 5
Other lenders have been building buffers too. Lloyds has set aside almost 2.0 billion pounds, Santander UK 461 million pounds, and Close Brothers said this month that an additional 135 million pound provision tied to the issue helped push it to a first-half statutory loss. 6
Dan Coatsworth, head of markets at AJ Bell, said the money many motorists once saw as a “treat” may now be absorbed by higher household bills. The FCA also launched a taskforce on Monday with the Solicitors Regulation Authority, the Information Commissioner’s Office and the Advertising Standards Authority, saying the scheme would be “free” and warning that claims firms or lawyers could take up to 30% of any award. 7
Still, the timetable could slip. Industry sources told Reuters the FCA may face legal challenges if lenders judge the final formula too broad on what counts as an unfair loan or too loose on what counts as excessive commission, opening the door to a slower, messier process. 6
The FCA’s pause on handling many motor finance complaints ends on May 31, 2026, after more than two years. Its message to borrowers is to complain directly to their lender now rather than wait, because cases already in the system should be reviewed sooner if the scheme is approved. 8
