The financial regulator has provided an update for millions of motorists awaiting further information on 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 due to inadequate disclosure of broker commissions. Drivers may be entitled to compensation if their car finance agreements included discretionary commission arrangements (DCAs), allowing brokers and dealers to raise interest rates on car loans to increase their commissions. Other eligible car finance agreements may involve high commission structures or undisclosed exclusive lender partnerships by brokers.
In a recent announcement, the FCA stipulated that motor finance companies must expedite the handling of complaints two months earlier than the original deadline of July 31, 2026, now moving it to May 31, 2026. The processing of these complaints has been on hold since January 2024, but firms are required to initiate investigations despite the pause. Firms are mandated to issue final responses to all motor leasing complaints starting from December 5, 2025, in compliance with standard complaint resolution procedures.
Over 14 million car finance agreements could potentially be covered by the compensation plan, slated for an early launch next year. The FCA estimated an average compensation of around £700 for most drivers. The regulatory body emphasized the importance of promptly addressing complaints, stressing that complaints cannot remain in limbo indefinitely. The FCA hinted at the likelihood of implementing a structured scheme to address complaints within defined timeframes.
The FCA strongly advised against using lawyers or claims management firms to file complaints, urging individuals to reach out directly to the lender handling their car finance for free complaint submission. Those who have already lodged complaints before the scheme’s formal initiation are expected to receive compensation sooner. The FCA projected potential compensation payouts by lenders to reach £8.2 billion.
Renowned financial expert Martin Lewis encouraged individuals to submit their complaints promptly if they suspect eligibility for compensation. Lewis recommended initiating a complaint early, particularly for older cases where detailed car finance information may have been lost. He highlighted the importance of establishing a record of interest for review, underlining that newer cases aiming for compensation clarity should also consider filing a complaint without risking any losses by abstaining.
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