Committee publication · Correspondence · 2 September 2025
Correspondence from Chair of the FCA on motor finance, dated 4 August 2025
From: Treasury Committee
Summary
The FCA Chair writes to the Treasury Committee following a Supreme Court ruling on motor finance bribery claims. The FCA has determined that many firms failed to comply with disclosure rules when selling motor finance loans. It will consult by early October on an industry-wide redress scheme, aiming for compensation payouts to start in 2026. The scheme may cost £9–18 billion, with most consumers receiving under £950 per agreement.
Key findings
- Supreme Court ruled brokers did not owe fiduciary duty to customers, limiting lender and broker exposure, but found one lender acted unlawfully due to commission size and disclosure
- FCA proposes redress scheme covering motor finance complaints from 2007 onwards, consistent with Financial Ombudsman and court jurisdiction periods
- Estimated scheme cost £9–18 billion (likely mid-range), plus administrative costs; individual compensation likely under £950 per agreement
- Consultation to be published by early October 2025; compensation payouts targeted to begin in 2026
- FCA expects healthy motor finance market to continue despite redress scheme; market functioning remained orderly after announcement
Tone
FactualTopics
financial-regulationconsumer-protectionmotor-financecompensation-schemes
Key actors
Nikhil Rathi, Dame Meg Hillier, FCA (Financial Conduct Authority), Supreme Court, Financial Ombudsman, Motor finance firms
Notable line
“Where consumers have lost out, they should be appropriately compensated in an orderly, consistent and efficient way.”
Key Quotes
“Where consumers have lost out, they should be appropriately compensated in an orderly, consistent and efficient way.”
“The Court did, however, find that in one case, a lender had acted unfairly – and therefore unlawfully. This was due in part to the size of the commission it paid and how it was disclosed.”
“We will publish the consultation by early October and finalise any scheme with the aim that people start receiving compensation next year.”
“… at this stage we think it is unlikely that the cost of any scheme, including administrative costs would be materially lower than £9bn and it could be materially higher.”
“The FCA currently estimates that most individuals will probably receive less than £950 in compensation per agreement.”
Source · parliament.uk record ↗