The city regulator estimates that most individuals will probably receive less than £950 in compensation.
Millions of people are being warned to be on the lookout for fraudsters posing as car finance lenders with bogus offers of compensation. The Financial Conduct Authority (FCA) said it has received recent reports of scammers calling people and offering fake compensation in exchange for personal details such as their name, address, date of birth and bank information.
This follows the FCA’s recent announcement of a potential car finance compensation scheme. The city regulator is reminding people that no compensation scheme is in place yet.
It also said car finance lenders are not yet contacting customers about compensation. People are being urged to hang up immediately if they receive such calls and avoid sharing any personal information. Scam calls and texts should be reported by forwarding them to 7726.
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In general, people should contact Police Scotland on 101 and their bank if they are worried they may have fallen for a scam.
Many banks have signed up to the simple-to-remember 159 phone number service, putting people through to their bank if they are worried about any suspicious contact.
Nisha Arora, director of special projects at the FCA, said: “We’re aware of scammers calling people and posing as car finance lenders, offering fake compensation and asking for personal details. There is no compensation scheme in place yet. If anyone receives a call like this, hang up immediately and do not share any information.”
The FCA recently announced that it will consult on a compensation scheme.
Many motor finance firms were not complying with rules or the law by not providing customers with relevant information about commission paid by lenders to the car dealers who sold the loans, it said previously.
Car finance compensation in a nutshell
Motor finance customers could receive a payout after the FCA announced it will consult on an industry-wide compensation scheme.
Many motor finance firms were not complying with rules or the law by not providing customers with relevant information about commission paid by lenders to the car dealers who sold the loans, the FCA said.
It comes after a ruling by the Supreme Court on August 1 on cases in which the FCA had intervened.
While some motor finance customers will not get compensation because in many cases commission payments were legal, the court ruled that in certain circumstances the failure to properly disclose commission arrangements could be unfair and therefore unlawful, the FCA added.
The FCA estimates that most individuals will probably receive less than £950 in compensation.
The final total cost of any compensation scheme is estimated to be between £9 billion and £18 billion.
The consultation will be launched by early October. If the compensation scheme goes ahead, the first payments should be made in 2026.
People who have already complained do not need to do anything, the FCA said. Consumers who are concerned that they were not told about commission and think they may have paid too much to their motor finance lender should complain now.
Consumers do not need to use a claims management company or law firm and doing so could cost them around 30 per cent of any compensation paid, it added.
In a recent post on X (formerly Twitter), consumer champion Martin Lewis wrote “there’s no harm in putting a DIY complaint now to see if you had a Discretionary Commission Arrangement”.
The FCA will propose rules on how lenders should “consistently, efficiently and fairly” decide whether someone is owed compensation and how much, it said.
It will monitor if firms are following the rules and act if they are not.
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