Drivers could sacrifice over 30% of their car finance scandal compensation payouts if they make one critical mistake: using a claims management company or law firm. The Financial Conduct Authority (FCA) has warned that there is no need to pay for such services, as consumers can complain directly to their lender for free.
How to Avoid Losing Money
If you use a third-party firm, you could lose more than 30% of any compensation you receive. The FCA emphasizes that you should not pay any fee to access compensation. Instead, contact your lender directly. If you are owed money but haven't complained, your lender should contact you by the end of 2026 for agreements made after 1 April 2014, and by the end of February 2027 for agreements between 6 April 2007 and 31 March 2014.
Beware of Scams
The FCA warns: "Watch out for scams. You can check you are dealing with your genuine lender using the contact details listed on the FCA website or through the FCA's new motor finance scams helpline." Never share sensitive details such as your PIN or online banking information.
Compensation Details
Some 12.1 million agreements made between 2007 and 2024 are now eligible for compensation, fewer than under the FCA's original proposals. The average payout has increased to around £830 per agreement. The FCA estimates that 75% of eligible consumers will make a claim, with total redress paid reaching £7.5 billion.
Nikhil Rathi, chief executive of the FCA, said: "We've listened to feedback to make sure the scheme is fair for consumers and proportionate for firms. It will put £7.5 billion back into people's pockets. Now we need everyone to get behind it and ensure millions get their money this year. Payouts should not be delayed any longer, especially as household bills come under greater pressure."
He added: "Delivering compensation promptly also gives lenders the chance to rebuild trust, and means we can draw a line under the past and support a healthy motor finance market for the future. An industry-wide scheme is the most efficient way of compensating affected consumers while supporting the ongoing availability of competitively priced motor finance for millions who rely on it."
Without such a scheme, the cost to lenders of dealing with complaints through the Ombudsman or courts is estimated to be over £6 billion higher.
