FCA: Compensation payments expected to be handed out by January 2027

Millions of people should get their car finance compensation payments this year, the UK Financial Conduct Authority has said. 

Lenders should aim to hand out payments to people who have already complained, or those who complain before the end of the implementation period, by January 2027. 

This group of people will be the first to receive payments. 

Answering a question from our Money live reporter Jess Sharp, Nikhil Rathi, CEO of the FCA, said lenders, if they wanted to, could start handing out payments tomorrow now rules of the redress scheme have been laid out

But he warned that this was very unlikely. 

“We will be pleased if lenders can start moving much faster, as consumers have been waiting a long time now,” he said. 

The FCA expects the vast majority of claims to be settled by January 2028. 

The implementation period will end on 30 June for loans taken out from 1 April 2014.

It will end on 31 August for loans taken out before that date. 

The FCA said the “short” period had been enforced to give lenders time to prepare. 

From these dates, lenders will have three months to inform drivers whether they are owed compensation and how much.

Consumers who are concerned that their lender is not following the rules of the scheme can complain to their lender or the Financial Ombudsman Service. 

Solicitor who led landmark case ‘extremely disappointed’ by scheme

Kevin Durkin is the solicitor who led the landmark case against FirstRand Bank.

He says he is “extremely disappointed” with the scope of the scheme announced by the Financial Conduct Authority.

“It seems to shortchange consumers even more than what was proposed in the consultation paper,” he tells Sky’s chief presenter Mark Austin.

“I can only suspect that it leaves the money in the pockets of the lenders… the tightening can only benefit the lenders from what I can see, based on the scheme’s proposal.”

Durkin says he will digest the full announcement from the FCA in the coming days.

“It remains to be seen how simple this scheme is,” he explains.

“There are a number of rules that underpin this scheme, and they are quite detailed and require reading and re-reading it even as a lawyer.

“It needs to be tested as to how simple the scheme is, and whether people can do it themselves or rather seek the assistance of a representative.”