The FCA is currently consulting on details of a compensation scheme for drivers who were unfairly sold a car finance deal between 2007 and 2024
The financial watchdog has issued an update for millions of drivers who are waiting for further details of a major car finance compensation scheme.
The Financial Conduct Authority (FCA) is currently consulting on details of a compensation scheme for drivers who were unfairly sold a car finance deal between 2007 and 2024 because they were not properly informed about the commission paid to brokers.
Drivers may be due compensation if they had a car finance deal which contained a discretionary commission arrangement (DCAs) which is where brokers and car deals were able to increase interest rates on car loans so they could get more commission.
Other car finance deals which may be eligible include those with a high commission arrangement, or where a broker did not disclose it was working exclusively with one lender.
In an update today, the FCA has said motor finance firms must start dealing with complaints two months earlier than originally planned. The deadline was July 31, 2026 – but this has now been moved forward to May 31, 2026.
The handling of these complaints has been paused since January 2024, which means firms have not needed to respond to them yet – although they should still be investigating.
Firms need to start sending final responses to any motor leasing complaint from December 5, 2025, in line with normal complaint handling rules.
More than 14 million car finance deals could be included in the compensation scheme, which is expected to launch early next year. The financial watchdog previously estimated that most drivers could receive around £700 in compensation.
The FCA said in an update today: “It is important that complaints are now dealt with promptly, not least as some consumers have been waiting almost two years for an answer. We are clear that complaints cannot be paused indefinitely.
“It is likely that we will go ahead with a scheme and complaints that fall within it will be dealt with under specific rules, which will include timeframes for them to be dealt with.“
The FCA previously urged drivers not to use lawyers or claims management companies to make a complaint. You can do this yourself for free by contacting the lender that provided the car finance. This is the firm you actually paid each month.
The financial watchdog has said those who have already complained before the scheme gets up and running are likely to receive compensation faster. It estimates lenders could pay out £8.2billion in compensation.
Martin Lewis has also previously urged people to get their complaint in now, if they believe they could be eligible. In a post on X, he said: “There’s no harm in putting in a complaint now to see if you had a discretionary commission arrangement, and it could be particularly beneficial in old cases where you have the detail of your car finance, but the car finance firm may have deleted it.
“That way you put a marker in that you want your case looked at. Though in newer cases, it’s more that you want to know now whether you’re likely due compensation or not, but if you don’t want the hassle, you likely wouldn’t lose out by not putting one in.”
