The financial regulator has provided an update for numerous drivers eagerly awaiting more information about 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 car finance agreements between 2007 and 2024 due to inadequate disclosure of broker commissions.
Drivers may be eligible for compensation if their car finance deals included a discretionary commission arrangement (DCAs), allowing brokers and car dealers to raise interest rates on loans to earn higher commissions. Other qualifying car finance deals may involve those with substantial commission arrangements or where brokers failed to disclose exclusive partnerships with specific lenders.
In a recent announcement, the FCA has mandated that motor finance companies must start addressing complaints two months earlier than initially scheduled. The previous deadline of July 31, 2026, has been revised to May 31, 2026. Handling of these complaints has been on hold since January 2024, requiring firms to initiate investigations without formal responses.
Firms are now obligated to issue final responses to all motor leasing complaints starting from December 5, 2025, following standard complaint resolution protocols. Over 14 million car finance agreements are anticipated to fall under the compensation scheme, set to launch in the near future, with an estimated average compensation of £700 per driver as projected by the financial regulator.
Emphasizing the need for prompt complaint resolution, the FCA stated, “It is crucial to address complaints promptly, especially given that some consumers have been awaiting responses for nearly two years. We affirm that complaints cannot remain unresolved indefinitely. It is probable that a dedicated scheme will be implemented, outlining specific rules and timelines for complaint resolution.”
The FCA has advised against utilizing legal services or claims management firms for complaints, encouraging individuals to directly contact the lender responsible for the car finance agreement for free resolution. Those who have already lodged complaints before the formal scheme launch are likely to receive compensation sooner, with lenders potentially disbursing a total of £8.2 billion in compensatory payouts.
Renowned financial advisor Martin Lewis has also recommended individuals to lodge complaints promptly if they suspect eligibility for compensation. Lewis emphasized the importance of initiating the complaint process early, particularly for older cases where detailed information may have been deleted by finance firms.
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