The regulatory body overseeing financial matters has provided an update for numerous drivers eagerly anticipating further information regarding a substantial car finance compensation program. The Financial Conduct Authority (FCA) is presently seeking feedback on the specifics of a compensation plan for individuals who were unfairly subjected to 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 included a discretionary commission arrangement (DCAs), allowing brokers and car dealers to raise interest rates on loans to earn more commission. Other car finance agreements eligible for compensation may involve high commission arrangements or cases where a broker failed to reveal exclusive partnerships with specific lenders.
In a recent announcement, the FCA has directed motor finance companies to begin addressing complaints two months earlier than initially scheduled. The original deadline of July 31, 2026, has been moved up to May 31, 2026. The handling of these complaints has been on hold since January 2024, but firms are required to continue investigating despite the pause. From December 5, 2025, firms must start providing final responses to any motor leasing complaints in accordance with standard complaint resolution procedures.
Approximately 14 million car finance agreements are expected to be covered by the forthcoming compensation scheme, set to launch early next year. The FCA estimates that most drivers could receive approximately £700 in compensation. The FCA emphasized the importance of promptly addressing complaints, highlighting that some consumers have been awaiting responses for nearly two years. The agency indicated that a scheme is likely to proceed, outlining specific rules for handling complaints within the scheme, including prescribed timeframes for resolution.
The FCA previously advised against using legal services or claims management companies to file complaints. Individuals can make complaints directly to the lender who provided the car finance without incurring any costs. The FCA anticipates that lenders may payout a total of £8.2 billion in compensation. Notably, those who have already submitted complaints in advance of the scheme’s launch are expected to receive compensation sooner. Financial expert Martin Lewis encouraged eligible individuals to file complaints promptly to potentially benefit from the compensation scheme. Lewis suggested that even if there is uncertainty about eligibility, initiating a complaint could be advantageous, particularly in cases where critical details have been erased by the finance company.