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For nearly two decades, millions of British drivers signed car‑finance agreements believing they were getting a fair deal. They compared models, negotiated monthly payments, and trusted that the numbers in front of them reflected the true cost of the loan. What they didn’t know—what many were never told—is that hidden commissions were quietly shaping those deals, inflating costs and steering customers toward more expensive finance packages. Now, as the scale of the mis‑selling scandal comes into focus, the fight over compensation has begun. And it is already turning bitter.
The Financial Conduct Authority has proposed a sweeping redress scheme, one of the largest in UK consumer‑finance history. On paper, it looks like justice: up to 14.2 million unfair motor‑finance agreements could be eligible for payouts, with an average compensation of around £700 per driver. But the moment the proposal was published, the backlash erupted. Slater & Gordon, one of the law firms leading claims for affected motorists, accused the regulator of protecting lenders rather than consumers. Their analysis suggests the FCA’s formula undervalues the harm done—so severely that drivers could lose an average of £500 each compared to what they should receive.
The numbers are staggering. According to Slater & Gordon, the FCA’s approach could short‑change 14.2 million people by a combined £8.1 billion. They argue that a fair payout would be closer to £1,200 per driver, not the £700 the regulator expects lenders to pay. The firm says the proposed formula “does a big favour to the very banks that caused the problem,” many of which are now reporting record profits while consumers brace for disappointment.
At the heart of the scandal lies a simple but damaging practice. For years, car dealers and brokers received commissions from lenders—commissions that increased when customers were steered toward higher‑interest loans. Many buyers were never told about these incentives. They were denied the chance to negotiate, denied the chance to shop around, denied the transparency that consumer‑protection laws require. The FCA has already ruled that these arrangements created unfairness. What remains unresolved is how to put things right.
The stakes are enormous. Nearly half of all car‑finance agreements signed between 2007 and 2024 could be eligible for compensation. Millions of households are watching closely, many already counting on the payout to ease the pressure of rising living costs. But trust is fragile. Surveys show that only a small fraction of consumers believe lenders will run a fair redress scheme, and many say they will consider legal action if the FCA’s final decision falls short of expectations.
This is more than a financial dispute. It is a test of public confidence—confidence in regulators, in lenders, in the idea that ordinary consumers will be protected when powerful institutions break the rules. The FCA insists its formula is balanced and legally sound. Slater & Gordon insists it is not. Between them stand millions of drivers waiting to learn whether justice will be delivered or diluted.
The scandal is still unfolding. The compensation scheme is not yet final. But one thing is already clear: the fight over how much drivers are owed may become as contentious as the mis‑selling that caused the scandal in the first place.