Up to 14 million people affected by the UK’s car finance issue may receive around £700 each in compensation.
The payments are expected to be lower than initially predicted. However, the Financial Conduct Authority (FCA), which outlined the compensation plans on Tuesday, stated that lenders could face costs of up to £8.2bn, with the total possibly rising to £9.7bn.
The regulator's long-awaited proposals apply to millions of car finance agreements signed between April 2007 and November 2024. The issue stems from claims that some lenders improperly influenced car dealers through hidden commissions, leading many buyers to unknowingly pay more for their loans.
In a consultation document, the FCA noted that, based on estimated participation, lenders might have to pay £8.2bn, though the figure could reach £9.7bn.
Last August, the FCA suggested most individuals would likely receive less than £950 per agreement. At the time, it indicated the total cost would probably not fall below £9bn and could rise as high as £18bn.
Most new vehicles and a growing number of used cars are acquired through finance deals, usually involving personal contract purchases or hire purchase agreements. Annually, around 650,000 such agreements are made for new cars alone.
If implemented, this would be the largest mass compensation linked to financial products since the issue with payment protection insurance (PPI), which saw 34 million people receiving roughly £1,000 each.
Read next
IEA set to urge unprecedented stockpile oil release to lower crude prices
The International Energy Agency is set to request the biggest drawdown of state oil reserves ever recorded, aiming to soothe the price surge sparked by the US‑Israeli strikes on Iran.
The global energy monitor is anticipated to urge its 32 members to free roughly 400 million barrels of emergency
How far could oil prices climb, and what could be the worldwide economic consequences?
Concerns about the world economy have intensified as oil prices have surged past $100 a barrel following the US‑Israel clash with Iran.
Economists warn that a growing chance of an extended war in the key energy‑exporting zone could severely affect living standards globally, reviving fears of a fresh
UK job market stalls as firms stay cautious on hiring
Data indicate that the UK labour market is struggling under weak recruitment demand, with only modest indications of improvement.
Two reports issued on Monday note that firms stay wary of taking on new employees because of cost pressures and economic uncertainty, underscoring the market’s continued fragility.
The monthly employment