The financial regulator has provided an update for numerous drivers eagerly awaiting more information about a significant car finance compensation initiative. The Financial Conduct Authority (FCA) is currently seeking feedback on the specifics of a compensation program for individuals who were unjustly 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 agreement included a discretionary commission arrangement (DCAs), allowing brokers and car dealers to inflate interest rates on car loans to boost their commissions. Other eligible car finance agreements may involve high commission structures or cases where brokers failed to disclose their exclusive relationship with a single lender.
In a recent announcement, the FCA instructed motor finance companies to expedite the handling of complaints by two months, advancing the original deadline from July 31, 2026, to May 31, 2026. Complaint handling for these cases had been on hold since January 2024, but firms are now required to commence sending final responses to motor leasing complaints starting from December 5, 2025, in accordance with standard complaint resolution procedures.
The compensation scheme is projected to encompass over 14 million car finance agreements and is anticipated to launch in the early months of the upcoming year. The FCA estimates that most drivers could potentially receive approximately £700 in compensation. The FCA emphasized the importance of promptly addressing complaints, highlighting that some consumers have been awaiting responses for nearly two years. The regulator indicated that a scheme is likely to be implemented, specifying that complaints falling within its scope will be managed according to specific guidelines with defined timeframes for resolution.
The FCA advised against utilizing legal or claims management services to file complaints, urging affected individuals to directly contact the lender responsible for their car finance to make a complaint at no cost. The regulator noted that individuals who have already submitted complaints before the scheme’s operationalization are expected to receive compensation sooner. Lenders could potentially disburse £8.2 billion in compensation, as estimated by the FCA.
Noted financial expert, Martin Lewis, has encouraged individuals to submit their complaints promptly if they believe they are eligible for compensation. Lewis emphasized the significance of initiating a complaint to ensure that cases involving discretionary commission arrangements are reviewed, particularly in instances where detailed car finance information may have been deleted by the finance company. Lewis mentioned that while newer cases mainly seek clarity on compensation eligibility, individuals may choose not to file a complaint if they prefer to avoid potential hassle without losing out on compensation.