The financial regulator has provided an update for numerous motorists awaiting further information on 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 wrongly sold a car finance contract 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 dealerships to raise interest rates on car loans to earn more commission. Other qualifying car finance agreements may involve those with high commission structures or where a broker failed to reveal an exclusive partnership with a single lender.
In a recent announcement, the FCA has instructed motor finance companies to begin addressing complaints two months earlier than originally scheduled. The previous deadline of July 31, 2026, has been advanced to May 31, 2026. Complaint handling for these cases has been on hold since January 2024, although firms are expected to continue investigating complaints. From December 5, 2025, companies must start providing final responses to any motor leasing complaints in accordance with standard complaint handling protocols.
More than 14 million car finance agreements could be encompassed by the forthcoming compensation scheme, set to launch early next year. The FCA estimates that most drivers might receive approximately £700 in compensation. The regulator emphasized the need for prompt complaint resolution, stressing that delays are unacceptable. Individuals are encouraged to address complaints directly with the lender who issued the car finance, rather than involving legal or claims management entities. Those who have already submitted complaints are likely to receive compensation sooner once the scheme is operational, with potential payouts totaling £8.2 billion. Renowned financial expert Martin Lewis has advised individuals to file complaints promptly if they suspect eligibility for compensation, emphasizing the importance of initiating the process early.
