Martin Lewis responds to major update on car finance compensation claims – and explains move to make ASAP
MARTIN Lewis has some thoughts on the Financial Conduct Authority’s (FCA) recent decision to extend compensation claims.
Earlier today, we explained that the FCA has given customers of dodgy car finance deals a little longer to make a claim.
The generous move comes shortly after their investigation into shady sales practices which may have seen millions overpay.
The Money Saving Expert founder took to his X account this morning to speak on the update.
“The FCA has just announced the planned decision on whether firms systemically missold car finance due to Discretionary Commission Arrangements [DCA] will be moved from Sept 2024 to May 2025.
“More so it has delayed when firms must deal with complaints even further, to Dec 2025.
“Its announcement indicates there’s a chance that in May it will launch a consultation on a redress scheme (and the Court will have decided on a key case by then), and the move to Dec is so it’d be able to finish that consultation before firms have to put it in place.”
The money expert acknowledged: “Clearly the delay is disappointing for those awaiting a decision, including the 2m who’ve submitted complaints via the MSE free tool https://moneysavingexpert.com/reclaim/reclaim-car-finance/….
“Yet it does signal it’s still looking favourably on ruling it is mis-selling and a payout is due – even though the finance firms have been pushing back hard both publicly and through the courts.”
He finished off his tweet by issuing an urgent warning to his followers.
“Most important thing people can do it log their complaint asap, so that if there is a time bar, hopefully there’s less chance of it being ruled out of time.”
The FCA’s probe was set to conclude in September of this year, but the watchdog has now announced that it won’t finalise its report until May 2025.
When they started investigating, they suspended the need for lenders to have to issue a final response to a complaint within eight weeks until after its conclusions were released.
Given the setback, this means that lenders will now not have to issue a final response to complaints until December 4 2025 “at the earliest”.
According to the FCA, the delay has been in large part due to the fact that lenders have “struggled to supply the data we need within the requested time”.
This, combined with a pending court case reviewing a particular complaint, has left investigators unable to complete their work by the initial deadline.
But as Martin pointed out, the silver lining is that motorists have more time to submit complaints, with the deadline to appeal your lender’s response through the Financial Ombudsman set back.
Brits will now be able to take their case to the Ombudsman until July 29 2026 or up to 15 months after their final response is dated, whichever comes later.
The FCA stresses that initial complaints will still need to be made within six years of the finance deal occurring or within three years of when you would reasonably become aware that you had grounds to complain.
Martin has a free tool on his website helping consumers know if they’ve been shafted by no-win, no-fee claims-chasing firms who promise to claw back cash for customers, but take a hefty chunk of the money themselves.
WHAT IS THE CAR FINANCE SCANDAL?
Before January 2021, some car finance lenders allowed brokers who arranged loans to set, or increase, interest rates for customers.
It was known as a “discretionary commission arrangement”, and the higher they set your interest rate the more commission they earned.
Customers did not know this was in place or that they were paying over the odds for car insurance.
The practice was banned in January 2021 by the Financial Conduct Authority.
Since then, complaints have rocketed, with more than 17,000 filed to the Financial Ombudsman Service.
The FCA told car finance firms to review their practices and fix any wrongdoing — but this hasn’t happened.
Around 30,000 motor finance complaints were dealt with by major lenders between January 2019 and the end of June 2023.
