Millions of motorists are facing potential delays in receiving compensation for unfair car finance deals following a legal challenge. Consumer group Consumer Voice has raised concerns about the calculation methodology of the Financial Conduct Authority’s compensation scheme, which could result in millions of consumers receiving inadequate compensation. The scheme is anticipated to lead to approximately £7.5 billion in payouts, slightly lower than the initial estimate of £8.2 billion, with total costs, including administration, expected to reach £9.1 billion.

Consumer Voice is set to request a legal review of the compensation scheme, arguing that it should accurately reflect the harm suffered by drivers and include properly calculated compensatory interest. The group contends that the FCA’s approach has excluded a significant number of consumer complaints from receiving full redress. Alex Neill, co-founder of Consumer Voice, emphasized the need for a fair and lawful compensation scheme that holds lenders accountable for the mis-selling of car finance.

The FCA defends its scheme as the quickest and fairest way to compensate consumers, while critics, including Fairer Finance’s managing director James Daley, caution that challenging the scheme could prolong the process and impact millions of individuals awaiting compensation. The scheme applies to car finance agreements made between April 6, 2007, and November 1, 2024, involving commission payments from lenders to brokers. Drivers who had discretionary commission arrangements, high commission rates, or undisclosed contractual ties may have been mis-sold their agreements.

The FCA previously estimated an average compensation of £700 per agreement, but individual circumstances may vary. The recent adjustment in eligibility criteria means that fewer drivers will qualify for redress, but those who do will receive higher payouts.