The financial regulator has provided an update to millions of motorists 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 for individuals who were unfairly sold car finance agreements between 2007 and 2024 without adequate disclosure of broker commissions.
Affected individuals could be entitled to compensation if their car finance agreements included discretionary commission arrangements (DCAs), allowing brokers and dealers to hike interest rates on loans to boost their commissions. Other qualifying scenarios involve deals with high commission structures or instances where brokers failed to disclose exclusive lender partnerships.
In a recent announcement, the FCA mandated that motor finance companies must expedite complaint resolutions two months sooner than initially scheduled. The deadline for processing complaints has been moved up from July 31, 2026, to May 31, 2026.
Complaint handling for these cases has been on hold since January 2024, but firms are expected to continue investigating. Final responses to motor leasing complaints must start being issued from December 5, 2025, in accordance with standard complaint resolution protocols.
Over 14 million car finance agreements could be covered by the forthcoming compensation scheme, set to launch early next year. The FCA has estimated that most claimants could receive approximately £700 in compensation.
In an official statement, the FCA emphasized the need for prompt complaint resolutions, highlighting the prolonged wait times some consumers have endured. The agency hinted at establishing specific rules for handling complaints within the scheme, including defined timeframes for resolution.
The FCA discouraged individuals from using legal or claims management services to file complaints, advising direct communication with the lender for free complaint submission. Those who have already lodged complaints ahead of the scheme’s implementation are likely to receive quicker compensation, with projected payouts totaling £8.2 billion by lenders.
Financial expert Martin Lewis has encouraged potentially eligible individuals to submit complaints promptly. Lewis emphasized the importance of initiating a complaint process to ensure consideration for compensation, especially in cases where critical financial details may have been lost over time.
This updated information reflects the progress and changes in the car finance compensation scheme, aiming to streamline the resolution process for affected consumers.
