LONDON, March 26, 2026, 21:50 GMT
- The Financial Conduct Authority plans to reveal its stance on motor finance redress after the market shuts on March 30.
- The plan, aimed at roughly 14.2 million agreements signed from 2007 through 2024, would see average compensation land near 700 pounds per contract. Total hit to firms is estimated at about 11 billion pounds.
- The Financial Times and Reuters say banks and claims management firms are considering how to push back, as lenders like Lloyds, Santander UK, and Close Brothers start setting aside provisions.
On Monday, Britain’s Financial Conduct Authority is expected to outline its stance on motor finance redress, spotlighting an 11 billion-pound compensation plan that’s fueling clashes between banks and claims firms. The move will determine how millions of drivers get reimbursed for undisclosed or unclear commissions on car loans—and if payouts might kick off in 2026.
Timing is key here, with the regulator keen to wrap up one of Britain’s priciest mis-selling sagas—but without triggering a flood of complaints, ombudsman appeals, or litigation. Earlier this month, the FCA floated a three-month window to implement the plan, bumping it to five months for older deals. The goal: get millions paid back in 2026. Back in October, when the consultation kicked off, chief executive Nikhil Rathi was blunt: “many motor finance lenders did not comply with the law or the rules,” he said, adding that it’s time customers saw “fair compensation.” FCA
Rathi told lawmakers March 24 that the FCA planned to lay out its approach right after the markets shut on Monday. The regulator later posted confirmation of the schedule on its website, following last October’s consultation on an industry-wide redress plan for borrowers it claims faced unfair treatment.
The plan applies to regulated motor finance deals inked from April 6, 2007, through Nov. 1, 2024, in cases where lenders paid commission to brokers. According to the FCA, around 14.2 million agreements could be flagged as unfair. That includes discretionary commission setups—where dealers could bump up a customer’s interest rate to pocket a bigger cut—plus certain high-commission and tied deals.
The FCA in October put estimated lender compensation at roughly 8.2 billion pounds, pegging average payouts to consumers near 700 pounds per agreement. In an analyst call, the regulator said total costs to firms—including what it will take to implement changes—could reach about 11 billion pounds. Still, the FCA has cautioned that most motor finance agreements are unlikely to meet the criteria, so payouts will swing above or below that average for many.
As the deadline approaches, opposition has intensified. The Financial Times says UK banks and claims management firms are gearing up for legal battles against the scheme. Reuters, for its part, notes lenders are pushing back against what they call an overly broad definition of unfair loans and a low threshold for labeling commission as “excessive.” Financial Times
Lloyds has already set aside close to 2 billion pounds, the largest figure in the group. Santander UK bumped its motor finance provision up to 461 million pounds. Close Brothers, after taking another 135 million-pound hit this month, says its total provision now stands near 300 million pounds.
Close Brothers stands out as the sector’s most obvious flashpoint right now. Chief executive Mike Morgan pushed back hard, telling Reuters he “strongly, strongly” disagreed with Viceroy Research’s critical report on the bank’s provisioning. RBC Capital Markets analyst Benjamin Toms went further, dismissing the short seller’s claims as “sensationalist”. Morgan added that until there’s more clarity around the redress scheme, the lender can’t bring back its dividend. Reuters
The FCA wants to prevent claims companies from pocketing big chunks of compensation. Borrowers are being pushed to file complaints themselves, with the regulator insisting there’s no need to get a claims manager or lawyer involved. Anyone who does might hand over more than 30% of their payout—this, as the FT noted, comes while claims specialists gear up to challenge the scheme.
The equation between speed, cost, and legal risk remains unsettled. The FCA, in a March 4 update, said it’s still weighing options and sifting through over 1,000 responses. Consumers can choose to bypass the FCA process and take their case to court—though the regulator notes that legal action carries no guarantees and could end up netting less after costs.
