Martin Lewis challenges financial regulator boss: Why the poor interest rate on car finance mis-selling redress?

Regulator the Financial Conduct Authority (FCA) revealed the details of its proposed compensation scheme last month. If you used finance from April 2007 to November 2024 to buy a car, motorbike or camper van, check if you're one of 14 million people due a typical £700.

ITV's The Martin Lewis Money Show Live – Tuesday 4 November

From The Martin Lewis Money Show Live on Tuesday 4 November 2025 courtesy of ITV. All rights reserved. Watch the full episode on ITVX.

Martin: 'This isn't a decent interest rate'

Below is a transcript of Martin's discussion with Nikhil Rathi, the chief executive of the FCA.

Note: If you had extra costs due to the mis-selling (eg, you took out other debt or got into financial difficulty due to the car finance), you may later be able to argue for more interest. So keep hold of any bank statements or other documents that prove this.

Martin: "I believe you've set this rate too low. I'm submitting in your consultation that you've set this rate too low. At the minimum, it should be compounded. Why have you set it so low?"

Mr Rathi: "We think it's a fair rate. Over this period, interest rates were often quite low. You probably wouldn't have got more than that if you were saving. And the Financial Ombudsman Service (FOS) has also set that rate, so it's sensible for us to..."

Martin: "I told the FOS consultation it was too low as well."

Mr Rathi: "So you're going to respond to our consultation, Martin. And all of this is subject to consultation, including the remedy, and absolutely we'll look at all of the evidence.

"But, overall, we think this is fair. And the cost of going to court, not just legal fees but time and uncertainty, is quite high. So we think consumers will do pretty well with our scheme."

Martin: "But, potentially, someone with a typical payout, because of this interest, could be getting £300 less. Again, they might have to pay 30% to give to a claims firm. But I think you are, by doing this, opening the door to claims firms saying to people to go the court route.

"And I think there's a fairness to the industry but especially to the consumer that you have a higher interest rate. That isn't a decent interest rate. You could have got more in savings and it would have cost you a lot more in debt. If I owed a bank, it wouldn't be saying, 'You get 2%'. It would charge me a proper commercial rate. Surely they've mis-sold to us – it should be higher for us too."

Mr Rathi: "I don't think you necessarily get more going to court. If you go to court, you'd have to pay 30% in legal fees potentially, and it will take longer. So overall, we think that most consumers are going to do reasonably well from the scheme. We'll make sure it's fair. But look, like I said, it's a consultation. We'll hear all the views.

Martin: "Can the public reply to your consultation?"

Mr Rathi: "We've had hundreds already."

Martin: "You might have thousands more after this."