Martin Lewis has issued a warning to anyone making a car finance mis-selling claim, highlighting a problem that could see them lose around one third of their compensation. In a social media video promoting his podcast, the money saving expert cautioned about certain claims management companies (CMCs) that handle compensation applications in exchange for a portion of the final settlement.
FCA Warning on Misleading Adverts
This warning follows a statement from the Financial Conduct Authority (FCA) regarding deceptive adverts by some CMCs. The FCA reported it had identified a growing number of advertisements that appear to offer independent advice from an individual but are actually paid promotions from CMCs and law firms.
The Car Finance Mis-Selling Scandal
The issue revolves around the car finance mis-selling scandal, which has impacted the sale of approximately 12 million vehicles. A refund scheme worth £9.1 billion has been established. Mr Lewis shared an email from a listener named Nikki, who claimed a company had submitted a claim on her behalf without her consent and demanded a fee to close the case.
Mr Lewis explained: "I think you went online on social and you probably filled in one of those forms that says, 'Check whether you've been mis-sold car finance'. You did it when you were scrolling and you put your details in, then you forgot about it. What 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 got everything'. Well, that simply isn't acceptable."
Eligibility for Compensation
An agreement is eligible for a compensation claim if the driver was not informed about at least one of the following: 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, unless the lender can prove visible links with the manufacturer and dealer.
Firms have until the end of June 2026 to handle complaints for loans taken out from 1 April 2014, and until the end of August 2026 for earlier loans. People can complain directly to their lender or use free tools like the one on the Money Saving Expert website. Some services take a share of the compensation, which can exceed 30% in certain cases.
FCA Statement on Adverts
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."
Consumers should be aware that some adverts:
- Pose as impartial advice from individuals without clearly stating they promote a business.
- Misuse logos, imagery, or references linked to well-known companies, media outlets, or public figures to falsely suggest endorsement. The FCA recently banned adverts from a CMC that used edited, unauthorised clips of Martin Lewis.
- Fail to clarify that you can make a claim for free.
Following FCA action, one firm has agreed to remove all its adverts. The regulator will continue to take action to prevent consumers from being misled. Firms must remove misleading content and ensure any consumers misled into signing up are restored to their original position, which may include unwinding contracts for free.
What to Do If You Have a Complaint
If you are unhappy with your CMC, you should complain directly to them. Issues can include how you signed up, whether you gave consent, how your case was handled, data usage, and fees charged. The FCA has created a template letter to assist with this.
If you wish to leave before compensation is paid, you may be asked to pay a fee, but it must be reasonable and reflect work done. If you were signed up without consent or misled, you can ask to exit the contract for free and may be owed compensation.
If you are dissatisfied with the firm's response, you can take your complaint to the relevant Ombudsman: the Claims Management Ombudsman for FCA-regulated firms, or the Legal Ombudsman for those regulated by the Solicitors Regulation Authority.
