The financial regulatory authority has provided an update for numerous motorists awaiting further information regarding 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 vehicle finance agreements between 2007 and 2024 due to inadequate disclosure of broker commissions.
Drivers may be entitled to compensation if their car finance agreements included discretionary commission arrangements (DCAs), enabling 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 situations where brokers failed to disclose exclusive partnerships with particular lenders.
In a recent announcement, the FCA mandated that motor finance companies must expedite the resolution of complaints two months earlier than previously scheduled. The original deadline of July 31, 2026, has been advanced to May 31, 2026. The handling of complaints in this regard has been on hold since January 2024, though firms are expected to conduct investigations despite the pause.
Furthermore, firms are required to commence providing final responses to any motor leasing complaints from December 5, 2025, adhering to standard complaint handling protocols. Over 14 million car finance agreements may be encompassed in the forthcoming compensation scheme, anticipated to launch early next year, with an estimated average compensation of £700 per driver, as per the initial assessment by the financial watchdog.
The FCA emphasized the importance of prompt complaint resolution, highlighting the prolonged wait faced by some consumers. The authority indicated a probable implementation of a designated scheme with specific rules governing complaint processing timeframes. It reiterated its advice against engaging legal or claims management services for filing complaints, encouraging direct contact with the lender for free complaint submissions.
The FCA projected potential compensation payouts totaling £8.2 billion, urging early complainants to potentially receive faster compensation. Notably, financial expert Martin Lewis recommended initiating complaints promptly for potential eligibility assessment, particularly for cases involving older agreements where critical details may have been lost. Lewis underscored the value of submitting a complaint to trigger a review process, especially in cases where compensation might be warranted.