The financial regulator has provided an update to numerous motorists eagerly anticipating more 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 a car finance agreement between 2007 and 2024 due to inadequate disclosure of broker commissions.
Drivers might be entitled to compensation if they held a car finance agreement that included a discretionary commission arrangement (DCAs), allowing brokers and car dealers to raise interest rates on car loans to boost their commissions. Other eligible car finance agreements may involve high commission arrangements or cases where a broker failed to reveal an exclusive partnership with one lender.
In a recent announcement, the FCA mandated that motor finance companies must begin addressing complaints two months earlier than initially scheduled. The previous deadline of July 31, 2026, has been advanced to May 31, 2026. Complaint handling has been on hold since January 2024, but firms are expected to continue investigating complaints promptly.
More than 14 million car finance agreements are anticipated to be covered by the compensation scheme, set to launch in the early part of next year. The FCA estimates that most drivers could receive approximately £700 in compensation. The regulator emphasized the importance of promptly addressing complaints to provide consumers with timely responses, hinting at the likelihood of implementing specific rules for complaints falling within the scheme.
The FCA previously discouraged drivers from engaging lawyers or claims management firms to file complaints, advising them to contact the lender directly for a free self-submitted complaint. Those who have already lodged complaints ahead of the scheme’s implementation may receive compensation faster. The FCA envisions lenders disbursing £8.2 billion in compensation.
Financial expert Martin Lewis has encouraged potentially eligible individuals to submit their complaints promptly. Lewis suggested initiating a complaint to determine if a discretionary commission arrangement existed, especially in older cases where finance details may have been lost. The process ensures that cases are flagged for review, with newer cases seeking clarity on compensation eligibility.