💰 Another Blow to Justice: Statutory Compensatory Interest Rate Slashed from 2026

From 1st January 2026, the statutory compensatory interest rate will be cut from 8% to just 1% above the Bank of England base rate over the period of time that the consumer has been wronged.

Let’s call this what it is:

A calculated move, timed perfectly to benefit banks and lenders—and to strip consumers of their full and rightful compensation.

This isn’t about fairness, nor financial reform. This is about protecting corporate profits, reducing liabilities, and making it harder for wronged consumers to receive the compensation they deserve.

🔧 What’s Changing?

For decades, the standard compensatory interest rate applied to consumer redress has been 8%. This was designed to:

• Reflect the cost of lost funds to the consumer
• Act as a meaningful deterrent to mis-selling or unfair conduct
• Ensure that financial institutions did not profit from consumer detriment

Now, under reforms led by the FCA and Financial Ombudsman Service, and undoubtedly influenced by the Treasury and the banking industry, this is being diluted to 1% above the BoE base rate—currently only 4.25%, and falling.

🕰 The Timing Is No Coincidence

This change is not happening in isolation. Its timing speaks volumes.

From early 2026, compensation payments for motor finance commission mis-selling—worth potentially tens of billions of pounds—will begin being calculated and paid to affected consumers.

And now? Just as these payouts are due to be finalised, compensatory interest is being slashed.

The message is loud and clear: Protect the banks, minimise payouts, and move on.

💸 What This Means for Consumers

The reduction in compensatory interest is not some trivial accounting change. It will mean:

• Potentially thousands of pounds lost for individual consumers
• Billions saved for the banks and lenders who caused the harm
• A financial system where wrongdoers are rewarded with lower liabilities

It’s an insult to the very concept of justice.

⚠️ This Is Corruption—Not Reform

This is not a neutral policy update. It is a deliberate weakening of consumer redress, timed to coincide with the motor finance fallout. And it reeks of:

• Regulatory capture: where regulators serve the interests of the industry they are meant to oversee
• Government complicity: with ministers and Treasury officials echoing industry talking points
• Financial greed over public duty

We must stop dressing this up as “modernisation.” It’s corruption. Full stop.

📣 Enough Is Enough

This latest change is just one in a growing list of measures designed to chip away at consumer rights while shielding corporate offenders. In the past 12 months alone, we’ve seen:

• The FCA side with lenders at the Supreme Court motor finance hearing
• The introduction of referral fees for FOS, thus cutting off access to representation for the most vulnerable in society
• And now, a dramatic reduction in compensation owed to victims of financial harm

🧾 True Reform Is Simple: Make Misconduct Unprofitable

If the government and regulator truly wanted a fair financial system, the answer would be clear:

• Keep the 8% interest rate to ensure meaningful redress
• Penalise firms who fail to uphold consumer duties
• Focus on deterrence, not damage control

But instead, consumers are watching their rights erode in real-time—while banks celebrate yet another handout in disguise.

🔚 Conclusion: Greed Over Justice

This isn’t regulation. This isn’t reform. It’s state-sanctioned erosion of consumer rights.

The FCA, under the influence of government and industry lobbyists, has made it clear whose side it’s on. And it’s not yours.

YOUR MONEY CLAIM