Millions of car finance customers affected by the commission scandal are being warned not to pay third parties to handle compensation claims. The Financial Conduct Authority (FCA) says drivers can make complaints for free using official tools, avoiding potentially high fees charged by claims firms.
Millions of Drivers Could Receive Compensation
More than 12 million customers could be eligible for compensation under a redress scheme linked to historic car finance agreements. The FCA estimates that around £7.5 billion could be paid out to people who were affected by discretionary commission arrangements between 2007 and 2024.
These agreements allowed some car dealers to increase interest rates on finance contracts in order to receive larger commissions from lenders. Regulators found that this practice could have resulted in customers paying more than they should have.
FCA Warns Against Claims Management Fees
The financial regulator is urging customers to avoid unnecessary costs by making complaints directly. Using a claims management company (CMC) or law firm could result in fees of up to 30% of any compensation received, reducing the amount returned to affected drivers.
The FCA has published a free complaint letter template to help customers submit claims themselves. Sheree Howard, executive director at the FCA, said many people are unsure how to begin the process and may not realise they can make a complaint without paying for assistance.
Advertising Campaign Launched to Support Consumers
The FCA has started a £2 million information campaign to help customers understand their rights and access free complaint resources. The campaign will run across television, radio, print media, billboards and social media until September 6, directing drivers towards the regulator’s official complaint tools.
A survey of 1,000 motor finance customers found that 27% lacked confidence about making a complaint without using a claims firm. The research also showed that 59% of customers had already submitted or were considering a claim, while 23% remained uncertain about their options.
Regulator Targets Misleading Claims Advertising
The FCA has also taken action against misleading advertising from claims management companies. Since January 2024, the regulator has had 1,200 adverts removed or amended, including 170 adverts in June alone.
Authorities have raised concerns that some companies may be encouraging consumers to use paid services when free complaint routes are available.
Compensation Scheme Faces Legal Challenges
A compensation scheme for affected car finance customers was launched in March, but parts of the process have been delayed following legal action from lenders. The FCA said it intends to defend the scheme while the legal challenges continue.
For customers who believe they may have been affected, the regulator recommends checking eligibility and using official channels before turning to paid claims services.
