The financial regulator has provided an update for numerous motorists awaiting further information about a significant car finance compensation program. The Financial Conduct Authority (FCA) is presently discussing the specifics of a compensation initiative for individuals who were unfairly sold a car finance agreement between 2007 and 2024 due to inadequate disclosure of broker commissions. Drivers may be entitled to compensation if their car finance contract included a discretionary commission arrangement (DCAs), where brokers and car dealers could raise interest rates on car loans to earn more commission. Other eligible car finance agreements may involve high commission arrangements or instances where a broker failed to disclose its exclusive partnership with a single lender.
In a recent announcement, the FCA stated that motor finance companies must address complaints two months ahead of the original schedule. The previous deadline of July 31, 2026, has been brought forward to May 31, 2026. Complaint handling for these cases has been on hold since January 2024, although firms are expected to continue investigating them. Firms are required to start sending final responses to any motor leasing complaints from December 5, 2025, adhering to standard complaint handling procedures.
Over 14 million car finance contracts could be covered by the compensation scheme, anticipated to roll out early next year. The FCA estimated that most drivers might receive approximately £700 in compensation. The regulator emphasized the importance of promptly addressing complaints, noting that some consumers have been awaiting resolutions for nearly two years. The FCA indicated that a scheme would likely proceed, with specific rules governing complaints within it, including defined timeframes for resolution.
The FCA discouraged drivers from using legal representation or claims management services to file complaints, urging them to contact the lender directly for free complaint submission. Those who have already lodged complaints before the scheme’s launch are expected to receive expedited compensation. Lenders could potentially pay out £8.2 billion in compensation. Financial expert Martin Lewis advised individuals to submit their complaints promptly if they believe they qualify for compensation, emphasizing the significance of initiating the process early. Lewis recommended initiating a complaint even in cases where details of the car finance agreement might have been lost, as it could be pivotal for future considerations.