FCA sets minimum £9 billion remediation bill for motor finance lenders as total industry cost reaches $12 billion following consultation-driven reduction

The Financial Conduct Authority (FCA) has published its final position on the motor finance mis-selling scandal, setting a minimum liability figure of £9 billion for lenders following a consultation process in which the industry successfully pushed back against the regulator's originally higher proposed number. The total estimated industry cost has settled at approximately $12 billion (roughly £9.5 billion), down from the initially floated range of £11–13 billion, reflecting concessions the FCA made after engagement with affected institutions. Major lenders caught in the remediation include Lloyds Banking Group, Barclays, and Close Brothers — all of which have been provisioning against the liability. The mis-selling relates to discretionary commission arrangements (DCAs) — a practice, now banned, under which car dealers were permitted to set their own interest rates on finance agreements and earn higher commission by doing so, without customers being aware of the conflict of interest. The Supreme Court is due to hear a related appeal in the coming months, and the FCA's remediation framework will need to align with whatever the court determines about the scope of liability. The regulator has indicated it will operate a consumer redress scheme, giving lenders a defined window to contact affected customers proactively rather than responding piecemeal to individual complaints. The remediation affects millions of car finance agreements written between 2007 and 2021.

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