UK FCA car‑finance redress scheme leaves 1.1 million low‑value loans out

The Financial Conduct Authority's mass redress scheme, created to compensate motorists mis‑sold car loans between April 2007 and November 2024, will pay an average of £830 per eligible agreement. Analysis by consumer law firm Slater & Gordon shows that about 1.1 million low‑value finance agreements – those with commission of £120 or less before April 2014 and £150 or less after – are excluded, affecting low‑income drivers who used the loans for cheaper vehicles.

Consumer advocacy group Consumer Voice is launching a legal challenge, arguing the scheme short‑changes poorer borrowers. Meanwhile, three lenders – the financial services arms of Volkswagen, Mercedes‑Benz and the car‑finance division of Credit Agricole – have sued the FCA, contending the redress plan could cost the industry around £9.1 billion. The legal disputes have put the payout scheme in limbo, with millions of potential payments delayed.

The FCA maintains the scheme is fair and proportionate, urging consumers to contact their lenders directly if they believe they are owed compensation and warning against unnecessary fees from claims firms.