The financial regulator has provided an update for numerous 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 plan for individuals who were unfairly sold car finance agreements between 2007 and 2024 due to inadequate disclosure of broker commissions.
Affected drivers may be entitled to compensation if their car finance agreement included a discretionary commission arrangement (DCAs), allowing brokers and dealerships to inflate interest rates on car loans to increase their commissions. Other qualifying car finance agreements may involve those with high commission structures or where a broker failed to disclose an exclusive lender partnership.
In a recent announcement, the FCA declared that motor finance companies must commence addressing complaints two months earlier than initially scheduled. The previous deadline of July 31, 2026, has been brought forward to May 31, 2026.
Handling of these complaints had been on hold since January 2024, meaning firms had not been required to respond, although investigations were still ongoing. Firms are now mandated to start delivering final responses to any motor leasing complaints from December 5, 2025, in line with standard complaint resolution procedures.
The compensation scheme, expected to launch early next year, could encompass over 14 million car finance agreements. The FCA had previously estimated an average compensation of £700 for most drivers. The regulator emphasized the need for prompt complaint resolution, noting that some consumers had been waiting almost two years for a response.
The FCA advised against engaging lawyers or claims management companies to file complaints, urging affected individuals to contact the lender directly for free complaint resolution. Those who had previously lodged complaints before the scheme’s implementation are anticipated to receive compensation sooner, with an estimated total payout of £8.2 billion by lenders.
Renowned financial expert Martin Lewis encouraged eligible individuals to submit their complaints promptly, emphasizing the potential benefits, especially for older cases where detailed car finance information may have been lost. Lewis advised taking proactive steps now to assess potential eligibility for compensation.
