A constellation on a redress scheme for 14 million people who took out car finance has been extended until December 12.
The Financial Conduct Authority (FCA) recently announced around 14 million people across the UK may be due compensation payouts averaging £700 as a result of hidden commission on motor finance deals agreed between April 2007 and November 2024.
Consumer champion Martin Lewis has been at the forefront of urging drivers who took out finance to purchase a new car, campervan or motorbike within that time period, to check if they are due the payout, expected to be early next year.
The financial guru devoted most of the first episode of the new series of The Martin Lewis Money Show Live to the topic, with a full guide on how the compensation scheme will work, who it will affect and when a payout is likely to happen.
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Lucy in the studio audience asked if refunds for car finance mis-selling should be automatic, instead of people needing to claim.
Martin responded: “I actually think for the first time we are as close to an automatic form of payout as we are ever going to get.”
He added: “Technically, if you don’t complain, in many circumstances you will get your money back without doing anything.”
However, he does recommend submitting a complaint to your car finance lender as it would provide “certainty”.
Martin used a graph to explain the two ways to go about making a complaint:
- The FCA mass redress scheme – a predicted £8m paid out to 14m people, averaging £700 each
- Taking the finance firm to court – this is done individually and could result in a bigger payout, but could cost more employing the services of a lawyer or claims firm
Martin also explained how the compensation payouts will be ‘per agreement’, so if you had multiple agreements you’ll have multiple payouts.
The amount expected to be issued is around £700 on average, but Martin used a graph to illustrate how this figure can go up or down, depending on the amount of finance you borrowed and the length of borrowing time.
The consumer champion explained: “The regulator (FCA) is estimating that most will get two-thirds or more of the commission they paid back. The calculation is the same however you were mis-sold.”
If you are one of the millions affected by hidden commissions on car finance, it’s worthwhile watching Martin explain it all. You can catch up on the STV Player or ITV. You can also find all the details on MoneySavingExpert.com.
During the show, FCA Chief Executive Nikhil Rathi, answered questions and said the regulator wants to get the redress scheme up and running “early next year” but couldn’t give Martin a fixed timeframe.
However, he did say that if you have already made a complaint, you should have your money within nine months.
On Wednesday the FCA announced it was extending the consultation period until December 12, 2025 and will publish findings and plans for the redress scheme in February or March.
Richard Pinch, Senior Risk Director at leading independent financial services consultancy Broadstone, said: “The compensation scheme set out in the consultation paper will likely have a much greater impact than the sector expected and it appears the FCA have listened to lender’s calls for more time.
“For example, it is clear that collecting and analysing market data is already proving to be a challenging exercise for lenders demonstrating the immense complexity of implementing such a compensation scheme.
“The consultation has provoked concern throughout the motor finance market and it is likely that lenders and other firms representing the market will request significant changes to be made to the final rules which are now estimated to be published towards the end of Q1 2026.”