Just after financial markets close today, the Financial Conduct Authority will announce its final decision on the long-awaited motor finance redress scheme. 

Here’s a quick recap of the scandal… 

Basically, thousands of drivers were put on a higher interest rate without realising when buying a car on finance.

The watchdog found many car finance firms broke the law or its rules by not properly informing customers about commission paid by lenders to the car dealers that sold them the loan.

This practice, whereby brokers and dealers increase the amount of interest on a customer’s loan without telling them and receive more commission in the process, was banned in 2021. 

On 1 August 2025, the Supreme Court ruled that, in certain circumstances, failure to properly disclose these arrangements could be unfair and unlawful.

he FCA estimates that around 14 million were unfair and therefore eligible for compensation.  

Motorists who bought cars on finance between 2007 and 2024 could receive a payout. 

The average amount of compensation has been estimated at £700 per agreement, but it will be more or less depending on individual cases. 

The FCA set out draft plans last year, but it is likely to have made several changes after receiving more than 1,000 responses to a subsequent consultation. 

Details of car finance compensation to be revealed – with drivers expected to get £700

Millions of drivers who were mis-sold car finance agreements will find out how they will be compensated today. 

The Financial Conduct Authority will share its final plans for the motor finance redress scheme later this afternoon after holding a consultation of its proposals last year. 

In the regulator’s draft plans, it said the scheme will cover car finance agreements taken out between 6 April 2007 and 1 November 2024.

The FCA has estimated that around 14 million deals, or 44% of all those made since 2007, would be eligible for compensation. 

It is estimated that payouts will be worth an average of £700 per agreement – not per person. 

This means if you had taken out several agreements during the timeframe that were deemed to be unfair, you would get £700 for each of them. 

The exact compensation amount will vary depending on each individual case. 

The FCA has said that this, plus the operational costs of running the scheme, is expected to cost the industry £11bn. 

Lenders vs consumer groups 

Lenders and car finance providers have previously challenged the FCA’s proposals, with some raising concerns that the expected amount of compensation is too high and does not accurately reflect what customers lost.

There were around 1,000 responses to the watchdog’s plans during the consultation period. 

On the other side, some consumer groups and MPs have argued that many motorists will be short-changed under the current plans.