Motor Finance Scandal: My take on the FCA redress scheme

My response to the Financial Conduct Authority’s (FCA) announcement of a redress scheme for drivers who were mis-sold motor finance:

The FCA has said that millions of motorists could be due compensation for motor finance agreements taken out between April 2007 and November 2024, with lenders facing a potential bill of £9.1bn. The regulator estimates 12.1 million agreements are eligible, with an average payment of £829 per agreement.

Agreements may be eligible where drivers were not told about key commission arrangements or incentives linked to the cost of credit.

It’s good to see the FCA finally publish its redress scheme, and it’s clear a lot of work has gone into this on the back of wide-ranging feedback.

However, I fear this may not be the end of a long-running saga. There are widespread rumours that lenders want to continue to evade responsibility and drag this out through the courts. Banks should think carefully about what signal this sends to consumers after being caught out for unfair practices.

The key thing for consumers to weigh up is whether they think they will get what they are owed under this scheme. In theory, it should be a quick and simple way to get compensation, and it is worth emphasising that people do not need a law firm or claims management company to complain. But some experts warn some consumers may be leaving a lot of money on the table, as the average payout through the courts could be higher.

Lenders have claimed this redress could threaten their industry and even the wider economy. But throughout this process, the motor finance industry has remained strong. Now is the time to accept responsibility and pay consumers what they are owed.