LONDON, March 30, 2026, 12:11 BST
The Financial Conduct Authority is expected to outline compensation plans for millions of UK motorists who were mis-sold car loans, releasing details after markets shut on Monday. Lenders and auto finance divisions are preparing for what may become one of Britain’s priciest consumer payout efforts. The regulator confirmed it would announce its strategy shortly following the London close on March 30.
The numbers are hefty. According to the FCA, its proposed plan may impact some 14 million agreements written from April 6, 2007 up to Nov. 1, 2024, with average payouts landing around 700 pounds per case. Earlier, the regulator put the potential compensation bill at 8.2 billion pounds, while factoring in implementation could push the overall hit to firms to approximately 11 billion pounds.
Commission deals sit at the heart of this. The FCA says borrowers often weren’t given the full picture. Discretionary commission arrangements—where lenders and brokers could crank up rates for extra dealer profit—are already banned, but the proposed compensation covers some of those old setups, plus certain high-commission and tied-lender deals for hire purchase and Personal Contract Purchase, or PCP, agreements. PCPs let drivers pay in instalments, with a buyout option at the end.
The regulator has outlined a tentative schedule. Should it go ahead, companies would have a three-month window to set up the program—older contracts could see up to five months. Priority goes to those who’ve already filed complaints. The FCA maintains that millions might get payouts in 2026.
Provisions are going up across the industry. Ford’s FCE Bank in the UK has increased its motor finance redress reserve to 155 million pounds, a jump from the previous 61 million, The Times reported Monday. Company filings indicate that Ford’s European finance business primarily operates via FCE Bank in Britain.
Lloyds has put nearly 2.0 billion pounds aside, while Santander UK’s provision stands at 461 million pounds. Over at Close Brothers, a fresh 135 million pound charge—added this month in connection with the issue—tipped the group into a statutory loss for the first half.
Dan Coatsworth, head of markets at AJ Bell, noted that what many drivers used to consider a “treat” might now just go to paying steeper household bills. The FCA on Monday rolled out a taskforce alongside the Solicitors Regulation Authority, the Information Commissioner’s Office, and the Advertising Standards Authority. Officials stressed the scheme would be “free,” but cautioned that claims firms or legal advisers could end up taking as much as 30% of any payout. The Independent
Even so, the schedule isn’t set in stone. Industry sources speaking to Reuters warned the FCA could get tied up in legal disputes if banks find the new definition of unfair loans too sweeping, or see the excessive commission criteria as too vague. That could drag things out and complicate the rollout.
The FCA will lift its pause on most motor finance complaint handling on May 31, 2026, bringing an end to a suspension that’s stretched over two years. Borrowers are being told to go straight to their lender with complaints instead of holding off, since those who already have cases in the pipeline could see them reviewed ahead of others if the proposed scheme goes through.
