Millions of drivers could be eligible for compensation after the UK’s financial regulator unveiled plans to launch a redress scheme for the car finance scandal.
The Financial Conduct Authority announced this week that it would be rolling out a redress scheme for 14 million unfair motor finance claims.
The £8.2billion compensation scheme could see motorists receive £700, although some estimates could result in a total of £9.7billion being issued.
Initial estimates from the FCA suggested that between £9billion and £18billion could be issued as part of a redress scheme for motorists who were overcharged for their car finance deal.
The announcement was welcomed by many as the beginning of the end of the car finance scandal, with drivers finally receiving compensation.
The FCA outlined that motor finance agreements taken out between April 6, 2007, and November 1, 2024, could be eligible for compensation.
While drivers will be pleased to finally get compensation after almost 20 years in some cases, some organisations have come out against the proposed scheme.
GB News has rounded up all of the expert analysis of the ruling and what it could mean for your prospects of receiving compensation.
Millions of drivers could be eligible to receive compensation from the car finance scandal scheme
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GETTY/PA
How the legal experts reacted
Bott and Co said it welcomed the announcement from the FCA, adding that it gave consumers “long-awaited clarity” after dealing with a long delay.
It added: “The FCA’s proposed industry-wide compensation scheme represents a significant step towards achieving that.
“The true measure of success will be whether it delivers meaningful compensation that reflects the real financial harm suffered by consumers.
“We are reviewing the FCA’s proposals in detail and will continue to act in the best interests of the thousands of clients we represent.”
The Supreme Court gave a verdict on the future of the car finance scandal in August
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PAHow the finance sector reacted
Shanika Amarasekara, CEO of the Finance and Leasing Association, said she remains concerned that costs were too high for motorists.
However, she acknowledged that the FCA’s 360-page document requires more scrutiny over the coming weeks.
Ms Amarasekara said the FLA would assess the “best way” to get compensation for drivers who lost out, while keeping the car finance sector “stable and competitive” at the same time.
How the experts reacted
Martin Lewis, founder of MoneySavingExpert.com, also highlighted the new compensation scheme and explained what it meant to drivers.
He said “What really made me raise my eyebrows is that the way it’s going to be paid out is by far the simplest form of redress scheme we’ve seen, never mind for one of this scale.
“This is actually a consultation. But in reality, it’s the regulator setting out what it wants to do. It has to, by law, allow a consultation, but it’s unlikely to change apart from at the edges.”
Stuart Masson, Editorial Director of The Car Expert, added: “Ultimately, this scheme has the potential to bring closure to what has been a long-running and damaging issue in the car finance industry.
“But the real scandal is that it these unfair agreements were allowed to run for so long in the first place.”