UK car finance redress plan faces 2026 uncertainty
Plans to compensate British consumers for mis-sold car loans could cost significantly more than regulators estimated, putting 2026 payouts in doubt, industry sources say.
The Financial Conduct Authority (FCA) proposed an £11 billion redress plan in October, covering £8.2 billion in compensation and £2.8 billion in costs. However, sources suggest the actual cost could rise to £18–20 billion due to broader definitions of unfair loans and lower thresholds for excessive commissions, News.Az reports, citing Reuters.
Lenders including Lloyds, Barclays, and Close Brothers are reviewing the FCA proposals and are expected to raise objections during the consultation, which closes on Dec. 12. Without adjustments, the scheme could face costly legal challenges.
The FCA aims to finalize plans by end-March and begin payouts next year, emphasizing fairness and robustness while ensuring the motor finance market continues to function effectively.
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