Up to 14.2 million people could each receive an average of £700 in compensation due to car loan mis-selling, the financial services regulator has said.

Nearly half (44%) of all car loan agreements made between April 2007 and November 2024 could be eligible for payouts, the Financial Conduct Authority (FCA) said.

Those eligible for the compensation will have had a loan where the broker received commission from a lender.

Lenders broke the law by not sharing this fact with consumers, the FCA said, and customers lost out on better deals and sometimes paid more.

A scheme is seen by the FCA as the best outcome for consumers and lenders, as it avoids the courts and the Financial Ombudsman Service, therefore minimising delay, uncertainty and administration costs.

The scheme will be funded by the dozens of lenders involved in the loans, and cost about £8.2bn, on the lower end of expectations, which had been expected to reach as much as £18bn.

The figure was reached by estimating that 85% of eligible applicants will take part in the scheme.

What if you think you’re eligible?

Anyone who believes they have been impacted should contact their lender and has a year to do so. Compensation will begin to be paid in 2026, with an exact timeline yet to be worked out.

The FCA said it would move “as quickly as we can”.

People who have already complained do not need to take action. Complaints about approximately four million loan agreements have already been received.

There’s no need to contact a solicitor or claims management firm, the FCA said, as it aimed for the scheme to be as easy as possible.

A lender won’t have to pay, however, if it can prove the customer could not have got cover anywhere else.

The number of people who will get a payout is not known. While there are 14.2 million agreements identified by the FCA, the same person may have taken out more than one loan over the 17-year period.

More expensive car loans?

Despite the fact many lenders have to contribute to redress, the FCA said the market will continue to function and pointed out the sector has grown in recent years and months.

In delivering compensation quickly, the FCA said it “can ensure that some of the trust and confidence in the market can be repaired”.

It could not, however, rule out that the scheme could mean fewer offers and more expensive car loans, but failure to introduce a scheme would have been worse.

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The FCA said: “We cannot rule out some modest impacts on product availability and prices, we estimate the cost of dealing with complaints would be several billion pounds higher in the absence of a redress scheme.

“In that scenario, impacts on access to motor finance and prices for consumers could be significantly higher with uncertainty continuing for many more years.”

Sir Keir Starmer has begun the first full-blown trade mission to India since Theresa May was prime minister, bringing 125 UK CEOs, entrepreneurs and university leaders to Mumbai.

The prime minister flew on a plane with dozens of Britain’s most prominent business people, including bosses from BA, Barclays, Standard Chartered, BT and Rolls-Royce, for the two-day trip designed to boost ties between the two countries.

Starmer will meet Prime Minister Narendra Modi on Thursday, five months after the UK signed the first trade deal with India since Brexit.

The agreement has yet to be implemented, with controversial plans to waive national insurance for workers employed by big Indian businesses sent to the UK still the subject of a forthcoming consultation.

Speaking to journalists on the plane on the way out, the prime minister said he was determined to boost ties between the two countries.

The trip has been arranged to coincide with the Conservative Party conference, with the first day of meetings coinciding with Kemi Badenoch’s speech to activists in Manchester.

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However, the business delegation is likely to use the trip to lobby the prime minister not to put more taxes on them in the November budget.

Sir Keir has already turned down the wish of some of the CEOs on the trip to increase the number of visas.

“The visa situation hasn’t changed with the free trade agreement, and therefore we didn’t open up more visas,” he said.

He told business that it wasn’t right to focus on visas, telling them: “The issue is not about visas. It’s about business-to-business engagement and investment and jobs and prosperity coming into the United Kingdom.”

The prime minister sidestepped questions about Mr Modi’s support of Russian leader Vladimir Putin, whom he wished happy birthday on social media. US President Donald Trump has increased tariffs against India, alleging that Indian purchases of Russian oil are supporting the war in Ukraine.

Asked about Mr Modi wishing Mr Putin happy birthday, and whether he had leverage to talk to Mr Modi about his relationship with Russia, Sir Keir sidestepped the question.

“Just for the record, I haven’t… sent birthday congratulations to Putin, nor am I going to do so,” he said. “I don’t suppose that comes as a surprise. In relation to energy, and clamping down on Russian energy, our focus as the UK, and we’ve been leading on this, is on the shadow fleet, because we think that’s the most effective way. We’ve been one of the lead countries in relation to the shadow fleet, working with other countries.”

Sir Keir refused to give business leaders any comfort about the budget and tax hikes, despite saying in his conference speech he recognised the last budget had an impact.

“What I acknowledged in my conference and I’ve acknowledged a number of times now, is we asked a lot of business in the last budget. It’s important that I acknowledge that, and I also said that that had helped us with growth and stabilising the economy,” he added. “I’m not going to make any comment about the forthcoming budget, as you would expect; no prime minister or chancellor ever does.”

Asked if too many wealthy people were leaving London, he said: “No. We keep a careful eye on the figures, as you would expect.

“The measures that we took at the last budget are bringing a considerable amount of revenue into the government which is being used to fix things like the NHS. We keep a careful eye on the figures.”

UK steel manufacturers are to be hit by another round of tariffs, even higher and more impactful than those levied by the US, representing “an existential threat” to the industry.

The European Union (EU) is hiking the tax on steel it imports, with the tariff to be 50%, double the 25% currently levied by the Trump administration in the US and the EU’s current rate.

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This decision is an “existential threat”, according to the assistant general secretary of the Community union, Alasdair McDiarmid.

“Europe is by far the largest destination for UK steel exports, and losing access to this market would have a catastrophic impact on British jobs,” he said.

UK Steel, the steel industry body, described it as “perhaps the biggest crisis the UK steel industry has ever faced” and called on the government to “secure UK country quotas”.

Establishing a UK country quota could mean some steel is traded with lower or no tariffs at all.

If this is not arranged, the industry would “potentially face disaster”, said Gareth Stace, the director general at UK Steel.

Why is the EU doing it?

The EU is erecting the trade barrier to avoid an influx of steel imports flooding its market in the wake of the US’s tariffs hike and to avoid making the EU less competitive for domestic producers.

EU commissioner for prosperity and industrial strategy, Stephane Sejourne, said the EU was also reducing the amount of steel being imported from abroad to “save our European steel plants and jobs”.

Similar measures have been called for by UK Steel.

“The UK government must now recognise the urgent need to put in place its own measures to defend against a flood of imports,” Mr Stace said.

“The probability of the EU’s measures redirecting millions of tonnes of steel towards the UK could be terminal for many of our remaining steel companies.”

Detail of when the policy will take effect has yet to be announced.

Responding to the news, industry minister Chris McDonald said,

“We will always defend our critical steel industry, which is why we are pushing the European Commission for urgent clarification of the impact of this move on the UK.”

“It’s vital we protect trade flows between the UK and EU and we will work with our closest allies to address global challenges rather than adding to our industries’ woes.”

When asked about the topic, Prime Minister Keir Starmer said, “Our position in relation to our steel industry is one of strong support.”

He added: “In relation to the question of tariffs or other measures, as you’d expect, we are in discussions with the EU about this, as we’re in discussions with the US about it. So I’ll be able to tell you more in due course.”