The UK car finance scandal continues to widen, with Secure Trust Bank confirming an additional $28 million (about £21 million) to cover potential redress for mis-sold motor finance agreements [1]. This latest lender to boost the charge to deal with historic commission-based complaints is expected to find it hard to manage the volume of outstanding claims as car finance complaints in the UK soar. The news comes as the Financial Conduct Authority (FCA) mulls a sector-wide compensation scheme.

Secure Trust’s update follows a series of similar announcements by other leading UK lenders, who have all revealed that they are increasing their redress pot to cover the potential payouts. Millions of agreements are now being assessed, with both customers and lenders waiting to see what could be one of the biggest redress programmes of recent times.

Financial Sector Braces for Wider Fallout

Secure Trust Bank's announcement this week that it is providing further redress is a clear indication of how seriously lenders are taking the matter. It is the latest of several high-profile lenders to increase its redress budget following the FCA's current review, following Lloyds Banking Group and Close Brothers among others. The measures follow allegations that car dealers and lenders had been taking part in discretionary commission arrangements (DCAs). Brokers using DCAs were incentivised with higher commissions if they charged their customer more interest on car loans.

Industry experts think these developments signal a major turning point in the car finance scandal, with long-term financial repercussions for the banks and potential relief for affected motorists. They have hailed it as a watershed moment for the UK finance industry which will change the way motor finance is sold and regulated in the future. 

FCA Consultation Opens: Millions Could Receive Compensation

The FCA published its consultation on 7 October 2025 on its proposal to set up a redress scheme for consumers who have been mis-sold motor finance [2]. The proposed scheme would start from 2026, and would apply to agreements entered into between 6 April 2007 and 1 November 2024, thereby spanning two decades' worth of car finance activity.

According to the FCA’s press release, millions of drivers could be eligible for a refund, with the regulator estimating that consumers would receive around £700 per agreement, on average [3]. The FCA’s primary goal is to ensure a fair and efficient system that delivers timely compensation to those impacted.

The full consultation document [4] confirms that the FCA expects to pay compensation to millions of mis-sold car finance customers next year, marking one of the largest collective redress efforts in UK financial history.

The consultation will be open for industry comment prior to final rules being issued. After approval, it will be automatic, so eligible customers won't have to file a new complaint to receive the benefit. Automatic may not include those who have already filed a complaint, which could put them at the front of the line to get the problem fixed.

You can follow the latest FCA action on car finance claims in the UK to keep updated as we will publish summaries of the experts and the official announcements.

What Should You Do Now?

The FCA has now proposed an industry-wide compensation scheme for unfair car finance agreements between April 2007 and November 2024, with average payouts expected to be around £700 per agreement.

You can still choose to complain directly to your lender, go to the Financial Ombudsman Service, or wait for the FCA’s redress scheme, expected to begin in 2026, all of which are free to do.

Why take action now?

If you’ve already complained, you’ll be in the queue to be contacted once the FCA scheme begins. Lenders are only required to contact customers they can trace. If you’ve moved or your old details have changed, it’s worth ensuring your complaint and contact information are up to date.

Complaining now also means your case is already logged and ready for review when the scheme starts. This step could save you time later and ensure your refund isn’t delayed once the FCA programme officially rolls out.

If you haven’t complained yet, Reclaim247 can help trace your finance history and submit a complaint on your behalf using just your name, address, and date of birth.

No paperwork. No hassle. No win, no fee.

Can You Still Claim for Mis-Sold PCP Agreements?

Yes. The FCA’s proposed redress scheme includes Personal Contract Purchase (PCP) agreements, which were among the most commonly mis-sold products. Many consumers were unaware that part of their interest rate was inflated to pay commission to dealers.

If you suspect you’ve been affected, it may be worth exploring potential PCP claims now, even before the official scheme begins.

Filing early ensures your case is documented and that your lender cannot delay the process. In some cases, many consumers asked, “What happens if a company ignores the Ombudsman after a complaint?”

The answer: the Ombudsman can legally enforce its decision, but this often takes time. Filing your claim now, either independently or through a claims management company, helps to protect your position.

The Role of Claims Management Companies

While consumers are free to handle their own complaints, navigating financial redress can be time-consuming. This is where a reputable claims management company can make a difference. These companies deal with huge numbers of finance complaints, so your case is logged correctly and chased with the appropriate lender or body.

Leading finance claims company Reclaim247 has already assisted thousands of UK drivers with the start of their car finance mis-selling claims, so they know what they’re doing. If you’re wondering how long does Reclaim247 take, it’s different in each case as the lender may be quick to respond and because agreements vary in their complexity. Simple cases can be logged and acknowledged in a matter of days, but more complicated claims or those with multiple agreements (or missing records) can take weeks for review.

Using a specialist can remove much of the stress, particularly if you have multiple agreements across different lenders or can’t locate your original paperwork.

Taking Control of Your Claim

The growing car finance scandal has left many UK motorists questioning whether they were misled during their purchase or finance process. The FCA’s upcoming process is designed to simplify payments, but it’s worthwhile to take action now if you want to speed up the reimbursement process.

First, determine if you had a PCP or hire purchase deal in place between 2007 and 2024. If you think your payments were unfairly charged, make a claim to your lender, or contact a trusted partner such as Reclaim247.

The claims process is entirely free to begin, and with professional support, you can ensure your voice is heard in what could become one of the UK’s largest consumer redress efforts.

The FCA’s proposed redress scheme is a glimmer of hope for millions of drivers who paid excessive interest on their car loans. Banks are battening down for a compensation claims storm, the latest from Secure Trust suggests. By complaining or partnering with an authorised claims management company now, you’ll be first in line for repayment when payments start in 2026.

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References:

1. Secure Trust Bank confirming an additional $28 million (about £21 million) to cover potential redress for mis-sold motor finance agreements - https://www.reuters.com/business/finance/uks-secure-trust-raises-motor-finance-mis-selling-charge-28-million-2025-10-20/
2. The FCA published its consultation on 7 October 2025 on its proposal to set up a redress scheme for consumers who have been mis-sold motor finance - https://www.fca.org.uk/news/statements/fca-consults-motor-finance-compensation-scheme
3. consumers would receive around £700 per agreement, on average - https://www.fca.org.uk/news/press-releases/14m-unfair-motor-loans-compensation-proposed-scheme
4. full consultation document - https://www.fca.org.uk/publication/consultation/cp25-27.pdf