---
title: "Millions Could Receive Compensation Under £18bn Car Finance Payout Scheme"
publisher: "Share Talk"
author: "sharetalk"
published: "2025-08-04T07:45:17+00:00"
modified: "2025-08-04T07:51:23+00:00"
date: 2025-08-04
canonical: "https://www.share-talk.com/millions-could-receive-compensation-under-18bn-car-finance-payout-scheme/"
category: "Automobiles, Parts & Engineering"
categories: ["Automobiles, Parts & Engineering", "Blogs", "Technology", "Technology, Media & Telecoms"]
tags: ["automatic", "car", "car finance", "Close Brothers", "compensation", "customers", "FCA", "Financial Conduct Authority", "Hire Purchase", "Lloyds", "loans", "motorbike", "PCP", "van"]
image: "https://i0.wp.com/www.share-talk.com/wp-content/uploads/2025/08/Car-park-.webp?fit=750%2C406&quality=80&ssl=1"
format: "news"
language: "en-GB"
---

# Millions Could Receive Compensation Under £18bn Car Finance Payout Scheme

**Published:** August 4, 2025
**Author:** sharetalk
**Categories:** Automobiles, Parts & Engineering, Blogs, Technology, Technology, Media & Telecoms
**Tags:** automatic, car, car finance, Close Brothers, compensation, customers, FCA, Financial Conduct Authority, Hire Purchase, Lloyds, loans, motorbike, PCP, van
**Featured image:** ![](https://i0.wp.com/www.share-talk.com/wp-content/uploads/2025/08/Car-park-.webp?fit=750%2C406&quality=80&ssl=1)

---

**Millions of Drivers Could Receive Payouts from £18bn Car Finance Compensation Scheme**

Millions of UK motorists may be eligible for compensation under a redress scheme announced by the [Financial Conduct Authority (FCA)](https://www.share-talk.com/supreme-court-ruling-blocks-car-finance-compensation-claims-worth-billions/), following widespread mis-selling of car finance agreements involving discretionary commissions.

The FCA will launch a consultation by October to determine how the scheme will operate, with payments expected to begin in **2026**. The scheme could cost lenders between **£9 billion and £18 billion**, with **most individual payouts likely to be under £950**.

The announcement comes after the **Supreme Court overturned a major ruling** that could have exposed finance providers to **up to £44 billion** in claims — nearly as extensive as the **PPI scandal**. While the court sided largely with the lenders, it upheld a single case deemed “unfair” due to the size and disclosure of the commission.

Discretionary commission arrangements, banned in 2021, allowed car dealers to **increase their earnings by placing customers into higher-interest loans**. The FCA estimates that around **14.6 million finance agreements** between **2007 and 2020** included such terms. The new scheme may also extend to cover unfair practices up to **2024**, broadening the pool of affected borrowers.

FCA Chief Executive Nikhil Rathi said:

> “It’s clear some firms have broken the law. It’s fair for their customers to be compensated. Our aim is a scheme that’s simple and fair, without the need for claims management companies or lawyers, who would take a portion of any payout.”

The regulator stressed that although full implementation will take time, it intends to begin issuing compensation **from next year**.

The case that triggered this move was brought by Close Brothers and South Africa’s FirstRand, who challenged a Court of Appeal ruling suggesting most commission-based car loans were unlawful unless clearly disclosed.

Before the Supreme Court’s judgment, Chancellor Rachel Reeves was reportedly so concerned about its financial implications that she considered legislative intervention.

---

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