Experts issued a fresh warning that drivers could face a lengthy delay in compensation from the car finance scandal, in a bitter blow for millions of Britons.
Industry sources have indicated that motorists could face a delay in receiving redress from a car finance scheme set out by the Financial Conduct Authority (FCA).
The financial regulator outlined that it would offer a compensation scheme for millions of motorists impacted by the car finance scandal between 2007 and 2024.
The investigation was launched following concerns that car finance lenders were unfairly charging drivers commission without their knowledge.
Earlier this year, the FCA launched a consultation to hear feedback from the industry about how the compensation scheme could work for drivers and businesses.
It added that it would be extending the consultation deadline until December 12 to allow more time for market data, consumer feedback and dealer representatives.
The FCA stated that it expected to publish final rules in February or March 2026, with hopes of drivers receiving compensation at some point next year.
However, sources are now warning that the redress process could be delayed, Reuters reported.
Sources suggest the car finance scandal compensation scheme could be delayed further
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Insiders have warned that the FCA’s methodology for calculating costs has inflated the bill for lenders involved in the case.
Original plans suggested a total compensation of around £11billion, with drivers expected to receive an estimated £700 per agreement.
Despite this, new figures suggest the industry could face costs of between £18billion and £20billion, sources told Reuters.
They claimed that the FCA could face “a costly and time-consuming legal challenge” if it were to amend its forecasted financial proposals.
A spokesperson for the financial regulator explained it had “engaged extensively” through the consultation with feedback, helping to refine its proposals.
It added: “That’s vital if we’re to draw a line under this issue, with consumers fairly compensated and a motor finance market continuing to work well.”
Commenting on the FCA’s consultation and the car finance scandal, Adrian Dally, director of motor finance at the Finance and Leasing Association (FLA), said everyone should be treated fairly.
“For the redress scheme to be credible, it must only compensate those customers who have suffered loss,” he said.
Drivers have expressed concern over the impact the FCA investigation will have on car finance costs | GETTY
Some of the UK’s largest lenders have already set aside billions of pounds in anticipation of the compensation scheme.
Lenders include Lloyds, Bank of Ireland, Barclays, FirstRand and the finance arms of Toyota, BMW and Volkswagen.
The FCA’s consultation will end today (Friday, December 12, 2025) at 5pm, with drivers urged to provide feedback if they are impacted.