The Financial Conduct Authority (FCA) is to publish its long-awaited motor finance redress scheme next week, setting out how the £11 billion compensation scheme will be delivered across millions of historic agreements.
The announcement follows more than a year of regulatory review, legal challenge and consultation, with the industry now expecting clarity on eligibility, calculation and how claims will be administered at scale.
‘We will set out our approach on motor finance redress shortly after markets close on Monday 30 March, having consulted on a compensation scheme in October 2025,’ the FCA said.
The scheme is expected to cover agreements written between 2007 and 2024, following concerns over how commission was disclosed to customers.
£11bn industry impact expected
The FCA has previously estimated that around 85% of 14m eligible consumers will take part, equating to £8.2bn in compensation payments.
Including implementation costs of £2.8bn, the total impact on lenders and the wider sector could reach £11bn, making it one of the largest redress exercises in UK financial services.
Lenders including Close Brothers and Lloyds Banking Group have already increased provisions in anticipation of payouts.
Dealers brace for next phase
For dealers, the focus will now shift to operational delivery, including record keeping, historic documentation and supporting finance partners as claims are processed.
The FCA has indicated that the scheme will include an implementation period, with the aim of streamlining compensation payments to consumers during 2026.
Monday’s announcement is expected to mark the transition from uncertainty to execution, as the motor finance redress scheme enters its most critical phase.
Read AM’s timeline of the motor finance redress scheme, court rulings and FCA action
Ensure you always receive AM insights. Make us a preferred source of news on Google