Martin Lewis has issued an urgent warning to anyone pursuing a car finance mis-selling claim, cautioning that they could lose up to 30% of their compensation to claims management companies (CMCs). In a video shared on social media, the money-saving expert highlighted the risks of using CMCs, which handle claims in exchange for a cut of the payout.
FCA Concerns Over Misleading Adverts
The Financial Conduct Authority (FCA) has raised concerns about 'misleading' advertising by some CMCs. The regulator identified a growing number of adverts that appear to offer independent advice but are actually paid promotions from CMCs and law firms. This issue is central to the car finance mis-selling scandal, which affects approximately 12 million vehicle purchases, with a £9.1 billion refund scheme in place.
Martin Lewis's Warning
Mr Lewis explained that some people may have unknowingly signed up to CMC services by filling in online forms. He said: 'You may not have realised is some of those firms actually count that as signing up to their services and then they say, 'We're now acting for you and we want 30% if you get everything'. Well, that simply isn't acceptable.' He urged claimants to be cautious and check the terms before engaging with any company.
Eligibility for Claims
Claims qualify for compensation if the motorist was not informed about a discretionary commission arrangement (DCA), a high commission arrangement of at least 39% of the total cost of credit and 10% of the loan, or a right of first refusal. Financial institutions have until the end of June 2026 to process complaints for loans taken out from 1 April 2014 onwards, and until August 2026 for earlier loans. Claimants can lodge complaints directly with their lender or use free tools like the one on the Money Saving Expert website.
FCA Statement
The FCA stated: 'As part of the joint regulatory taskforce, the FCA has identified a growing number of adverts that appear to offer independent advice from an individual but are in fact paid promotions from CMCs and law firms encouraging people to sign up for motor finance claims.' The FCA warned that some adverts misuse logos and references to well-known figures, including Martin Lewis, to mislead consumers. After intervention, one firm has already committed to removing its adverts.
What to Do If You're Unhappy
If you are dissatisfied with a CMC, raise a complaint directly with them. The FCA has published a template letter to help. If you were misled or signed up without consent, you can request to exit the contract at no cost and may be entitled to compensation. If the firm is FCA-regulated, contact the Claims Management Ombudsman; if regulated by the Solicitors Regulation Authority, contact the Legal Ombudsman.
