FCA Proposes Massive Redress Scheme for Motor Finance Compensation

The UK's Financial Conduct Authority (FCA) has unveiled a major redress scheme proposal targeting improper disclosures in motor finance compensation claims. Following a Supreme Court ruling perceived as favorable to banks, the proposed scheme is estimated to cost between 9 and 18 billion pounds.

Despite the positive court outcome, the FCA insists on industry-wide compensation efforts, suggesting the lowest estimated costs may not fall below 9 billion pounds. This proposal affects numerous lenders who have already amassed nearly 2 billion pounds for potential liabilities.

The regulator anticipates initiating consultations by October, aiming to determine fair compensation frameworks for affected consumers. Pending outcomes, consumer payouts are projected to begin in 2026, maintaining fairness and integrity within the motor finance market.

(With inputs from agencies.)