Up to 14 million car finance deals may have been mis-sold, with average payouts of £700 each

Martin Lewis has issued urgent advice to drivers after the Financial Conduct Authority (FCA) unveiled its long-awaited redress scheme for millions caught up in the car finance mis-selling scandal.

The consumer champion revealed on his latest Martin Lewis Podcast that an estimated 14 million car finance agreements made between April 2007 and November 2024 could be affected, with average payouts expected to be around £700 per person.

“This is the only story in town today when you live in my world,” Lewis told BBC Radio 5 Live presenter Adrian Chiles. “Fourteen million car finance arrangements are said to have been mis-sold. It’s going to be an average payout of £700 per person. This affects huge swathes of people across the country.”

Lewis explained that the FCA’s proposed redress scheme is currently out for consultation and will likely come into effect in early 2026. “The consultation has launched,” he said. “When they say ‘consultation’, what that really means is — this is what we’re doing. Firms and consumer groups get their say, but the main points are unlikely to change.”

Under the scheme, affected motorists won’t need to take their complaints to the Financial Ombudsman or go through the courts. Instead, compensation claims will be processed directly through the FCA-administered mechanism once it is finalised.

The scandal centres on Personal Contract Purchase (PCP) and Hire Purchase (HP) agreements, where it’s alleged that some lenders mis-sold car finance deals by inflating interest rates or failing to disclose commission structures properly. Many consumers were left paying thousands more than necessary over the term of their contracts.

Lewis emphasised that the situation remains fluid as the regulator refines the details. “We’ve just learned all this,” he cautioned. “There’s still a little bit of wriggle room to be given here. We’ve dotted as many i’s and crossed as many t’s as we can, but the information is changing all the time.”

MoneySavingExpert.com, founded by Lewis, will be submitting feedback to the consultation to help ensure fairness and clarity for consumers. “One of our concerns is how firms will communicate with people,” he said. “There’s a risk that when letters or emails go out, people might think they’re scams. We’ve got to make sure that doesn’t happen.”

The FCA’s consultation is expected to run for several months before final plans are published. Once confirmed, affected car owners will be notified directly by lenders or via the scheme’s official website.

For now, Lewis has urged consumers not to rush into making court claims, advising them to wait for the official redress mechanism to open. “It’s better to go through the regulator’s process rather than risk costs or complications in court,” he said.

The announcement marks one of the largest consumer compensation efforts in UK financial history — potentially rivaling the scale of the PPI scandal, which saw billions refunded to mis-sold customers.

The FCA has said it aims to ensure that drivers “receive fair and consistent compensation” without lengthy legal battles.

Until then, Lewis’s message remains clear: check your car finance agreements, stay alert for official updates, and don’t fall for copycat scams.