Millions of consumers could be eligible for compensation under the financial Watchdog's motor finance redress scheme, its boss sa.
The Compensation Scheme was set up after the supreme court -right that some car finance firms broke the law or its rules by not likely informing customers about this Sold them the loan.
The regulator estimates the final cost of any redress scheme will be Around £ 18bn with compensation calculated to be justified at £ 950 Per Claimant but He Stressed Not All Claimants will Eligible. “We expect the average [compensation] To be hundreds, not thoughands, “Nikhil Rathi, FCA Chief Executive Said.
The redress scheme follows a supreme court Dealers in car finance dil.
Rathi Confirmed Evidence of Similar “Unfair Relationships” BetWeen Lenders and Consumers and That A Large Number Of Customers “Were Not Properly Informed” on the Details of their Car Purchase Day.
“We hope that compensation, where it is due, can start to be paid next year,” He toold mps on the parial treasury select. He toold them that during a period from 2007 Through to 2020 there are Around 30 million agents with consumer but but not all would be eligible for compensation.
The FCA Said it was still working on the details of the redress scheme and was consuling widely. “One of the things that we are looking at very close is what the scope of the scheme will be,” Mr Rathi Said.
He Said the FCA would be carry out a consumer awareness campaign to Alert Motorists to the fact they may be due compensation. He saad people who thought they might be affected should contact their leaders and “complain now,” he said.
“You do not need to use a cloud management companies or a law firm who may be up to 30 per cent of any compensation that you are due, he saaid.
MPS Heard that the FCA hassed hundreds of claims management companies (CMCs) to Move Adverts Relating to Motor Finance Redress Redressation Payouts Are Likely to be Much Lower Than Advertised.
Rathi Said the Regulator Intervened when it thought it thought is over the amount of compensation they will be complained if they complain about their historic car finance.
He SAID: “Some of the cmcs and law firms are putting out high-high-protected advertising to consumers they may get more than £ 4,500, and numbers like that.
“We have intervened in Around 400 Promotions By Claims Management Companies, Asking For Them to Be Removed or Amended, Since 2024.
“So we do agree with some some of those very large estimates … we do that average is like to be hundreds, not towels, of redress.”
FCA CHAIR ASHLEY ALDER ADDED: “We want to ensure that the design of the [compensation] Scheme is pitched at a level which does offer consumers a fair outcome and a better alternative [to the courts] For the Vast Majority. “
The FCA will publish its consultation in the coming weeks and expects a “Critical Mass” of Compensation Claims to be Dealt with in 2026.
