FCA to Spend £1mn on Motor Finance Campaign

The UK’s Financial Conduct Authority (FCA) is preparing to spend £1 million on a major information campaign about mis-sold car loans. The initiative comes after a landmark legal ruling opened the door to widespread consumer compensation, with the regulator aiming to prevent claimants from losing part of their payouts to third-party firms.

What Is Motor Finance and Why Does It Matter?

Motor finance refers to credit agreements, such as hire purchase or personal contract purchase (PCP), that allow people to buy cars in installments. In the UK, millions of drivers rely on these loans to access vehicles without paying the full cost upfront. However, a recent Supreme Court decision highlighted unfair practices by some lenders, raising questions about whether consumers were charged excessive interest rates or misled by brokers.

The ruling means that many customers could now be eligible for compensation. The FCA has estimated the total redress bill for the industry could reach between £9 billion and £18 billion, a figure that would have major consequences for banks, credit providers, and car dealerships.

How the Campaign Will Work

To spread the message, the FCA will use social media “finfluencers” on platforms like TikTok and Instagram, alongside radio and online video adverts. These influencers will inform consumers that they do not need to hire claims management companies (CMCs) or law firms to access the redress scheme once it is finalized.

Research shows that while 25 percent of motor finance customers have already filed a claim, nearly half did so through CMCs or law firms—services that can take up to 30 percent of compensation as fees. By raising awareness, the FCA hopes to ensure that drivers receive the full value of any payouts.

The campaign also reflects a wider regulatory focus on online financial promotion. The FCA has recently tightened rules on influencer marketing, even pursuing enforcement action against individuals promoting unauthorised credit and investment schemes.

Implications for Banks and the Credit Market

For lenders, the potential compensation costs present both financial and reputational challenges. Banks and credit providers involved in car loans may need to bolster reserves and adapt compliance systems. Beyond the immediate financial hit, the ruling may reshape how interest rates and loan terms are set in the future, with stricter oversight to protect borrowers.

The case also underscores the growing importance of consumer trust in financial services. With digital banking channels becoming central to customer engagement, institutions that fail to demonstrate transparency risk losing market share to competitors offering clearer, fairer terms.

Looking Ahead

The FCA will consult on the compensation scheme in the coming months, with payments expected to begin in 2026 if approved. For consumers, the key takeaway is straightforward: compensation should be free and direct, without the need to surrender a share of funds to intermediaries.

Closing Insight

The FCA’s campaign highlights a broader shift in financial regulation—one that prioritizes consumer protection, transparency, and digital engagement. As banks adapt, customers should remain cautious of high-cost claims services and instead explore direct, regulator-backed channels. For the industry, the lesson is clear: sustainable growth in credit markets depends not only on competitive interest rates and loans but also on fair treatment and trust at every step of the customer journey.

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