The Financial Conduct Authority (FCA) has provided an update for numerous drivers awaiting further information regarding a significant car finance compensation scheme. The FCA is presently consulting on the specifics of a compensation plan for individuals who were unfairly sold a car finance contract between 2007 and 2024 due to inadequate disclosure of broker commissions.
Drivers might be entitled to compensation if their car finance deal included a discretionary commission arrangement (DCAs), where brokers and dealers could raise interest rates on car loans to earn more commission. Other eligible car finance agreements could involve those with high commission arrangements or cases where brokers failed to disclose exclusive partnerships with lenders.
In a recent announcement, the FCA has instructed motor finance companies to begin addressing complaints two months earlier than initially scheduled. The previous deadline of July 31, 2026, has been brought forward to May 31, 2026.
The handling of these complaints has been on hold since January 2024, and firms are required to start issuing final responses to motor leasing complaints from December 5, 2025, in line with standard complaint resolution procedures.
The compensation scheme, expected to launch in the early part of the following year, may encompass over 14 million car finance deals. The FCA previously estimated that most drivers could potentially receive around £700 in compensation.
The FCA emphasized the need for prompt resolution of complaints and hinted at introducing specific rules for complaints falling within the scheme, including defined timeframes for resolution. Drivers have been advised not to engage lawyers or claims management companies but to contact the lender directly to make a complaint for free.
Individuals who have already lodged complaints are likely to receive compensation faster once the scheme becomes operational. The total compensation payout by lenders is estimated to reach £8.2 billion. Renowned financial expert Martin Lewis has encouraged eligible individuals to submit their complaints early to expedite the process.
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