Up to 14 Million Motor Finance Customers Eligible for Compensation
Around 14 million motor finance agreements made between April 2007 and November 2024 could be eligible for commission due to mis-selling. The Financial Conduct Authority (FCA) has advised consumers to avoid claims management companies to dodge unnecessary fees.
The FCA found that motor finance firms broke the law by not properly informing consumers about commission payments to car dealers. This led to higher interest rates. About 44% of the 32 million agreements examined during the period were deemed unfair.
Several major lenders, including Lloyds, Santander, and Close Brothers, have already set aside funds for potential commission payouts. The total cost of the compensation scheme could reach £8.2 billion, with a potential maximum of £9.7 billion. Each eligible consumer could receive an average commission of £700. The scheme focuses on discretionary commission arrangements where brokers could inflate interest rates.
Consumers have up to a year to make a claim directly, without needing claims management companies. The compensation scheme aims to deliver fair commission to consumers while minimizing disruption to the vehicle financing industry.
