The regulatory body overseeing finances has provided an update for the numerous individuals eagerly anticipating more information on a significant car finance compensation program. The Financial Conduct Authority (FCA) is in the process of gathering input on the specifics of a compensation initiative aimed at individuals who were improperly sold car finance agreements between 2007 and 2024 due to inadequate disclosure of broker commissions.
Eligible individuals may be entitled to compensation if their car finance agreement included a discretionary commission arrangement (DCAs), where brokers and car dealers could raise interest rates on car loans to boost their commissions. Other qualifying car finance agreements may involve those with high commission arrangements or cases where a broker failed to disclose exclusive ties to a single lender.
In a recent announcement, the FCA has instructed motor finance companies to begin addressing complaints two months earlier than previously scheduled. The initial deadline of July 31, 2026, has been advanced to May 31, 2026. Complaint handling had been suspended since January 2024, meaning firms have not yet responded to complaints, although investigations should still be ongoing.
Firms are now obligated to issue final responses to any motor leasing complaints starting December 5, 2025, in accordance with standard complaint handling procedures. It is estimated that over 14 million car finance agreements could be encompassed within the compensation program, expected to launch early next year. The FCA had previously approximated that most claimants could receive approximately £700 in compensation.
The FCA emphasized the importance of promptly addressing complaints, especially as some consumers have been awaiting resolutions for nearly two years. The likelihood of implementing a scheme is high, with complaints falling under it being subject to specific regulations, including designated timeframes for resolution.
Drivers were advised by the FCA to refrain from engaging lawyers or claims management firms to lodge complaints but rather to contact the lender directly to do so at no cost. Those who have already lodged complaints before the scheme’s initiation are likely to receive compensation sooner, with lenders potentially disbursing £8.2 billion in compensation.
Renowned financial expert Martin Lewis has encouraged individuals who believe they may qualify for compensation to submit their complaints promptly. Lewis highlighted the benefits of filing a complaint, especially in older cases where detailed car finance information may have been lost. He stressed that while newer cases may not require immediate action, it is advisable to initiate the process to ascertain potential eligibility without losing out by delaying.