Car finance scandal: Payouts of £700 per driver under compensation plans

Millions of victims of car finance mis-selling could receive less compensation than previously estimated, under plans from the regulator.

The Financial Conduct Authority (FCA) said payouts could result from 14 million motor finance agreements between April 2007 and November 2024.

The regulator previously suggested motorists could receive less than £950 per deal, but it now says the average will be about £700. Lenders could pay out £8.2bn in compensation.

The payouts are over commission arrangements between lenders and dealers, unfair contracts, and inaccurate information given to car buyers.

“It’s time their customers get fair compensation,” Nikhil Rathi, chief executive of the FCA, said.

“We recognise that there will be a wide range of views on the scheme, its scope, timeframe and how compensation is calculated. On such a complex issue, not everyone will get everything they would like.”

A ruling at the Supreme Court in August limited the breadth of these cases.