Martin Lewis, the founder of Money Saving Expert (MSE), has delivered an update on the Financial Conduct Authority (FCA) motor finance compensation scheme, warning that drivers expecting payouts will face further delays. The scheme, designed to compensate those mis-sold car finance between April 2007 and November 2024, has encountered legal challenges that are now set to be heard in court much later than anticipated.
Legal challenges push payouts to 2027
In a post on X, Lewis explained: "Things have been delayed further. The Court has just said it’ll only hear the legal challenges to the FCA scheme in Dec 26 or 27 - far later than had been thought." He added: "So even if the challenges fail, payouts likely wouldn’t start until mid-2027 at the earliest. And even then there could be appeals."
This news represents a significant setback for the estimated 12.1 million agreements that may be eligible for compensation, with around £7.5 billion expected to be paid out in total.
Advice for those who have already complained
Lewis offered guidance for motorists who have already submitted a complaint under the scheme. He said: "If you've complained. Sit tight. If you don't get a rejection now, then hopefully, if all goes to the current plan, you will be due a payout. Yet don't expect any further response otherwise. I know many find that frustrating."
Advice for those yet to complain
For drivers who have not yet lodged a complaint, Lewis strongly recommended doing so now. He explained: "It's still worth getting one in now, as you will eventually get paid out quicker if you're due. Plus there will be less 'not finding your info' risk."
Eligibility criteria for compensation
MSE has provided a checklist to help drivers determine if they are likely to be eligible. The FCA scheme covers car, van, motorbike, and campervan finance agreements (but not caravans). The finance agreement must have been taken out between April 6, 2007, and November 1, 2024. Although discretionary commission arrangements (DCAs) were banned from January 28, 2021, the mis-selling criteria have been expanded, meaning consumers may have been mis-sold up to November 2024.
The scheme applies to Personal Contract Purchase (PCP) and Hire Purchase (HP) agreements, but not to leased cars. Vehicles must be for personal use or for sole traders or small partnerships, with loans under £25,000. Finance taken out by incorporated businesses or limited companies is not included.
Drivers are eligible even if they have fully paid off the finance deal, no longer own the car, or if the car was repossessed. Those with multiple eligible car finance deals may be due multiple payouts. The scheme does not include interest-free finance agreements with a genuine 0% rate.
