5:50 am, December 17, 2025
The Financial Conduct Authority (FCA) is open to the idea of adjusting its proposed motor finance compensation scheme after hearing from more than 1,000 businesses and consumers, its boss has told MPs.
The watchdog’s chief executive, Nikhil Rathi, said some lenders have so far been ‘very focused on things they don’t like’ about its proposals.
The FCA’s consultation opened on October 7 and closed on December 12, and invited feedback to its plans for an industry-wide compensation scheme.
The regulator is hoping to compensate motorists who were unfairly sold a car loan between 2007 and 2024 because they were not properly informed about the commission paid to brokers, including car dealers.
Under the current proposals, about 14 million car finance deals could be eligible for compensation, with people estimated to get an average of £700 per agreement.
The scheme is expected to be launched early next year.
Appearing before the Treasury Committee, Rathi said: ‘We have had a very wide range of responses – over 1,000 – to our consultation which closed last week, including over 800 individual consumers responding with their views.
‘We see a range of views and where there is good strong evidence that might persuade us to adjust what we have proposed so that we get to a fair, proportionate scheme, we will consider that evidence.’
Rathi used the example of cases where 0% interest was charged on a car loan, saying the regulator was ‘hearing the arguments that actually there wasn’t a case for compensation with that’.
The proposals have been met with significant pushback from lenders including Santander and Lloyds, particularly challenging the FCA’s calculations for the amount that consumers lost out.
‘One way or another, we have to figure this out,’ Rathi stressed.
‘While you might say “this doesn’t work”, what’s your alternative?
‘And that’s the point I would make both to the consumer law firms but I would also make to the lenders who have been very focused on things they don’t like, but they also need to help us find solutions if that’s the case.’
