Martin Lewis has issued a warning to people pursuing compensation for mis-sold car finance agreements, stating that many may have been misled by claims management companies (CMCs). The Financial Conduct Authority (FCA) confirmed in March that approximately 12 million vehicles were sold under deals now potentially eligible for compensation, with a £9.1 billion refund scheme announced. However, payments have been delayed due to court challenges, with progress not expected until November 2026.
Free Tool vs. CMCs
The Money Saving Expert (MSE) website, founded by Lewis, launched a free tool to help people submit complaints. However, numerous other firms have established similar tools that take a cut of any successful claim. Lewis urged caution, noting the FCA's warning about misleading adverts by certain CMCs.
Lewis stated: "Car finance update: The regulator says many have been misled by the claims management companies (CMCs) they used to complain with and it has a template letter to complain about CMCs." He added that the FCA announced a £9 billion mass redress scheme for 12 million mis-sold motor vehicle finance agreements, and while MSE provides a free complaint tool, many CMCs are taking a chunk of any payout.
FCA's Concerns
The FCA identified a growing number of adverts posing as impartial advice but actually promoting CMCs and law firms. These adverts often misuse logos, imagery, or references to well-known companies or figures, including unauthorised clips of Martin Lewis. The FCA banned adverts from one CMC that used edited clips of Lewis to make misleading claims about average compensation.
The FCA emphasized that consumers can make claims for free and should not be misled into signing up with CMCs. Alison Walters, director of consumer finance at the FCA, said: "Accessing compensation is free, and people don't need to use a claims management or law firm to get what they're owed. If they choose to, it should be a genuine and well-informed choice, not one made because of a misleading advert."
What Qualifies for Compensation?
A deal qualifies if the driver was not informed about a discretionary commission arrangement (DCA), a high commission arrangement of at least 39% of total credit cost and 10% of the loan, or a right of first refusal, except where the lender can demonstrate visible links with the manufacturer and dealer.
Firms have until the end of June 2026 to process complaints for loans from April 1, 2014, and until the end of August 2026 for earlier loans. Motorists can complain directly to their lender or use free tools like MSE's.
What to Do If Misled
If dissatisfied with a CMC, consumers should raise concerns directly with the firm. The FCA provides a template letter for this purpose. If wishing to leave before compensation is paid, a reasonable fee may be charged, but if signed up without consent or misled, consumers can exit for free and may be owed compensation.
If unhappy with the firm's response, complaints can be taken to the relevant Ombudsman: the Claims Management Ombudsman for FCA-regulated firms, or the Legal Ombudsman for those regulated by the Solicitors Regulation Authority.
