Financial Conduct Authority

“The FCA said this provided an incentive for a buyer to be charged a higher-than-necessary interest rate, leaving them paying too much. Other car buyers were also judged to have signed unfair contract…”

“In 2021, the FCA banned deals where car dealers received commission from lenders, based on the interest rate charged to the customer. These were known as discretionary commission arrangements (DCAs) …”

“The regulator's central compensation scheme allows people to complain and potentially receive compensation for mis-sold deals without the need for a lawyer or to go through the courts.”

“Complaints have already been made about four million finance agreements. Those people do not need to do anything.”

“Average payments of about £829 are expected under the rules published by the Financial Conduct Authority (FCA).”

“The total cost of the compensation, including administrative costs, could hit £9.1bn.”

“The decision by the FCA, the financial regulator, applies to about 12 million car loans - just over 40% of the total number during the period.”

“In 2021, the FCA banned deals where car dealers received commission from lenders, based on the interest rate charged to the customer.”

“Other car buyers were also judged to have signed unfair contracts because the commission paid to the dealer was so high - accounting for at least 35% of the total cost of credit and 10% of the loan.”

“Complaints have already been made about four million finance agreements.”

“But the FCA has confirmed that no compensation will be paid before 2027 as a result of legal challenges to the scheme.”