7:43 am, February 19, 2026
The FCA has agreed to a major climbdown regarding its car finance redress scheme, with carmakers set to be made exempt.
That is according to reports in the national press, which suggest that ‘heavy lobbying’ by banks and carmakers has led to the significant change.
The FT reports that the financial regulator has listened to concerns that the redress scheme would harm investment int0 the UK’s automotive manufacturing industry.
As a result, it is expected that manufacturers’ in-house finance providers will not be expected to pay compensation to at least some customers who were mis-sold finance.
It has been estimated that the change could slash as much as £1bn off the total value of the redress scheme, offering major relief to the likes of Volkswagen, Stellantis, BMW and Toyota.
When pressed on the potential change, a spokesman for the FCA said: ‘We’re carefully considering feedback and decisions on final scheme rules have not been taken.’
The news has been welcomed by the Finance and Leasing Association who said that the currently proposed a redress scheme ‘doesn’t correspond’ with last year’s landmark Supreme Court ruling.
Adrian Dally, the trade body’s head of motor finance, added: ‘We think there was literally no loss to consumers in that segment. Captive finance companies’ aim is to help consumers buy their manufacturer’s cars.
‘The best way to get consumers to buy more cars is to have very cheap finance – low interest rates or 0pc interest rates. The captive finance company exists to provide the cheapest possible finance on the market for that car.’
While the news has been welcomed by the industry, consumer rights groups have questioned the decision.
Kavon Hussain, principal at Consumer Rights Solicitors, said: ‘The FCA’s latest climb down shows they are more concerned with corporate balance sheets than doing their jobs.
‘The big players, banks and manufacturers, are again being granted a reprieve whilst consumers are hit with yet another blow.
‘Not only does this dilution signal that mis-selling is simply the cost of doing business, it’s tantamount to a two-tiered justice system that will undermine consumer confidence in the system.’
