The financial regulator has provided an update for numerous motorists eagerly awaiting further information about a significant car finance compensation program. The Financial Conduct Authority (FCA) is presently seeking input on the specifics of a compensation initiative for individuals who were unfairly sold car finance agreements between 2007 and 2024, as they were not adequately informed about the brokerage commissions involved.
Affected individuals may be entitled to compensation if their car finance deals included a discretionary commission arrangement (DCAs), where brokers and car dealers could hike up interest rates on auto loans to earn higher commissions. Other eligible cases could involve car finance agreements with elevated commission structures or instances where a broker failed to disclose their exclusive ties to a single lender.
In a recent announcement, the FCA has mandated that motor finance companies must start addressing complaints two months earlier than initially scheduled. The original deadline of July 31, 2026, has been advanced to May 31, 2026. The handling of these complaints has been on hold since January 2024, although firms are expected to continue their investigations.
The FCA emphasized the importance of promptly addressing complaints, particularly for consumers who have been awaiting resolutions for nearly two years. The regulator hinted at the likelihood of implementing a compensation scheme with specific rules and timeframes for addressing qualifying complaints. The FCA also advised against using legal representation or claims management services to file complaints, encouraging individuals to directly contact the lender responsible for their car finance agreements.
It is estimated that over 14 million car finance deals could fall under the compensation scheme, with an anticipated launch early next year. The FCA previously estimated an average compensation amount of around £700 per affected driver. Those who have already lodged complaints before the scheme’s implementation are expected to receive compensation sooner, with lenders potentially disbursing a total of £8.2 billion in compensatory payments.
Renowned financial expert Martin Lewis has advised individuals to submit their complaints promptly if they suspect eligibility for compensation. Lewis recommended initiating a complaint to secure a review of the case, particularly for older instances where detailed car finance records may have been deleted by the finance provider. The process is seen as beneficial for clarifying eligibility for compensation, with potential significant payouts expected in the future.