The financial regulator has provided an update for numerous motorists eagerly anticipating 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 unjustly sold a car finance agreement between 2007 and 2024 due to inadequate disclosure of the commissions paid to brokers.
Drivers may be entitled to compensation if their car finance agreement included a discretionary commission arrangement (DCAs), allowing brokers and car dealers to raise interest rates on car loans to earn more commission. Other eligible car finance agreements may involve those with high commission arrangements or cases where a broker failed to disclose exclusive partnerships with specific lenders.
In a recent announcement, the FCA has mandated that motor finance companies must begin addressing complaints two months earlier than initially scheduled. The previous deadline of July 31, 2026, has been moved forward to May 31, 2026.
The resolution of these complaints has been on hold since January 2024, requiring firms to conduct investigations without responding formally. However, firms are now required to issue final responses to any motor leasing complaints from December 5, 2025, following standard complaint handling protocols.
Over 14 million car finance agreements could fall under the compensation scheme, expected to launch in the early part of next year. The FCA previously estimated that most drivers might receive approximately £700 in compensation.
The FCA emphasized the prompt handling of complaints, highlighting the importance of addressing consumer grievances promptly. It is probable that a scheme will be implemented to manage complaints falling within its purview, with defined timeframes for resolution.
The FCA discouraged drivers from engaging lawyers or claims management firms for complaints, advising them to contact the lender directly for free complaint submission. Individuals who have lodged complaints before the scheme’s launch are likely to receive expedited compensation. Lenders could potentially disburse £8.2 billion in compensation.
Renowned financial expert Martin Lewis advised individuals to file complaints promptly if they suspect eligibility for compensation. Lewis recommended submitting complaints early to initiate reviews, especially for older cases where detailed financial information may have been lost.
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