The Financial Conduct Authority has “let lenders off the hook” with their car finance redress scheme, a consumer rights group has said. 

The regulator’s final scheme will mean around two million fewer deals are eligible for compensation, but the average payout will be around £129 more, from £700 to £829. 

Alex Neill, co-founder of consumer rights group Consumer Voice, said: “The FCA has narrowed eligibility and reduced the overall bill for lenders, raising real concerns that many people will still be undercompensated.

“Millions of people were overcharged, and our research shows some were pushed into real financial difficulty.

“This was the regulator’s chance to put that right, but it instead appears to have let lenders off the hook.” 

The FCA is expecting the total amount of redress paid under its scheme to be about £7.5bn, lower than the previous £8.2 billion estimate, and based on about 75% of eligible consumers making a claim.