The financial regulatory body has provided an update for numerous motorists eagerly anticipating further information about a significant car finance compensation plan. The Financial Conduct Authority (FCA) is presently seeking input on the specifics of a compensation program for individuals who were unjustly sold a car finance agreement between 2007 and 2024 due to inadequate disclosure of broker commissions.
Drivers may be entitled to compensation if their car finance agreement involved a discretionary commission arrangement (DCAs), where brokers and car dealers could raise interest rates on car loans to boost their commissions. Other eligible car finance agreements may include those with high commission arrangements or where a broker failed to disclose an exclusive lender partnership.
In a recent announcement, the FCA mandated that motor finance companies must expedite the handling of complaints by two months, advancing the deadline for resolution from July 31, 2026, to May 31, 2026. Complaint processing had been on hold since January 2024, although firms are still required to investigate these cases.
Firms are now expected to issue final responses to motor leasing complaints starting December 5, 2025, in adherence to standard complaint resolution protocols. The compensation scheme, set to launch early next year, could encompass over 14 million car finance agreements, with an anticipated average compensation of £700 per driver as estimated by the financial regulator.
The FCA emphasized the importance of prompt complaint resolution, noting that the scheme would establish specific rules and timeframes for processing eligible complaints. The watchdog discouraged drivers from engaging legal or claims management services, urging them to directly contact their car finance lender for free complaint submission.
Individuals who have already lodged complaints before the scheme’s implementation are likely to receive faster compensation payouts. The FCA projected that lenders might disburse £8.2 billion in total compensation. Renowned financial expert Martin Lewis advised individuals to submit their complaints promptly if they believe they qualify for compensation, emphasizing the benefits of initiating the process early while cautioning against unnecessary hassle for newer cases.
This revised approach aims to streamline the compensation process for affected drivers and ensure timely resolution of their grievances related to car finance agreements.