The financial regulator has provided an update to numerous motorists awaiting more 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 sold car finance agreements unfairly between 2007 and 2024 due to insufficient disclosure of broker commissions. Compensation may be owed to individuals with car finance agreements that included discretionary commission arrangements (DCAs), allowing brokers and dealerships to raise interest rates on car loans to boost their commissions. Other eligible car finance agreements may involve those with high commission structures or where brokers failed to disclose their exclusive lender partnerships.
In a recent announcement, the FCA has mandated that motor finance companies commence addressing complaints two months earlier than initially scheduled. The deadline, originally set for July 31, 2026, has been advanced to May 31, 2026. The processing of these complaints had been halted since January 2024, meaning firms have not yet been required to respond, although investigations should still be ongoing. Companies must start issuing final responses to any motor leasing complaints from December 5, 2025, in accordance with standard complaint resolution protocols.
Over 14 million car finance agreements could potentially be covered by the compensation program, slated to be launched early next year. The FCA had previously estimated an average compensation amount of around £700 per driver. The FCA emphasized the importance of promptly addressing complaints, noting that some consumers have been awaiting responses for nearly two years. The watchdog hinted at the formalization of a scheme with specific guidelines for handling complaints within defined timeframes.
The FCA has advised against using lawyers or claims management firms to file complaints, encouraging individuals to directly contact the lender responsible for their car finance payments. Those who have already submitted complaints before the scheme’s launch are likely to receive compensation sooner, with lenders potentially disbursing up to £8.2 billion in total compensation. Financial expert Martin Lewis has encouraged eligible individuals to file complaints promptly, suggesting that initiating the process early could expedite compensation, especially in cases where critical details may have been lost over time.