The financial regulator has provided an update for numerous drivers awaiting further information about a significant car finance compensation program. The Financial Conduct Authority (FCA) is presently seeking input on the specifics of a compensation initiative designed for individuals who were unfairly sold car finance agreements between 2007 and 2024 without sufficient disclosure of broker commissions. Drivers might be entitled to compensation if their car finance agreements involved discretionary commission arrangements (DCAs), where brokers and car dealers could hike interest rates to maximize their commissions.
Additionally, car finance agreements characterized by high commission structures or cases where a broker failed to disclose exclusivity with a particular lender could also qualify for compensation. In a recent announcement, the FCA mandated that motor finance companies expedite the handling of complaints two months earlier than the original deadline of July 31, 2026, now moving it up to May 31, 2026.
The resolution of these complaints has been on hold since January 2024, meaning firms have not yet responded to them, though they are required to conduct investigations. Firms are expected to start issuing final responses to any motor leasing complaints from December 5, 2025, following standard complaint resolution protocols. The compensation scheme, anticipated to launch early next year, could encompass over 14 million car finance agreements, with the regulator estimating an average compensation payout of approximately £700 per driver.
The FCA emphasized the importance of promptly addressing complaints, especially since some consumers have been awaiting responses for nearly two years. The regulator hinted at proceeding with a structured scheme for handling complaints falling within its purview, which will outline specific timelines for resolution. Drivers were advised against engaging lawyers or claims management firms for complaints, as they can directly contact the lender responsible for their car finance to initiate the process at no cost.
Individuals who have already lodged complaints before the scheme’s activation are likely to receive compensation sooner, with lenders potentially disbursing up to £8.2 billion in total compensations. Notably, financial expert Martin Lewis encouraged eligible individuals to submit their complaints promptly, suggesting that historical cases with missing details could still be considered for compensation. Lewis highlighted the importance of registering a complaint to ensure a thorough assessment of eligibility, particularly for older cases where documentation may have been lost. In newer cases, determining potential compensation eligibility early was advised to avoid unnecessary complications.
