FCA sets minimum £9 billion remediation bill for motor finance lenders as total industry cost settles at £9.1 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 £9.1 billion — comprising around £7.5 billion in redress and £1.6 billion in non-redress (administrative) costs — down from the £11 billion the FCA had proposed at consultation, 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 has already ruled on the underlying liability question — its August 2025 judgment in *Hopcraft/Johnson v Close Brothers and FirstRand* ([2025] UKSC 33) found discretionary commission arrangements could give rise to an unfair relationship under the Consumer Credit Act — and the FCA's redress scheme was designed in response to that ruling. 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 2024.

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