A BIG car finance compensation update has been issued this morning.
The Financial Conduct Authority (FCA) has written to some firms today to remind them they should be progressing with complaints.
Motor finance leasing complaints have been paused since January 2024, but firms have been told today they must resume with queries from December 5.
But the watchdog said it extended the complaints pause for all other relevant motor finance DCA and non-DCA commission complaints until May 31 2026.
It said this timeframe enables the FCA to “finalise and begin implementing any compensation scheme, while giving firms a reasonable period to prepare”.
It comes as motor finance firms will be expected to cough up £8.2billion for breaking FCA rules.
Around 14million motor agreements taken out between April 6 2007 and November 1 2024 will be due a payout.
The FCA says lenders broke the rules by hiding important information, leaving customers unable to negotiate or find better deals, and in some cases, paying more for loans.
The financial watchdog has been consulting on an industry-wide scheme and last month extended the deadline for responses to the scheme as lenders and consumer groups said they needed more time.
The original consultation deadline was November 18, but it has now been pushed back to 5pm on December 12.
The final report is expected to be published in early 2026, either in February or March.
Rules for payouts will be published at the same time and the scheme will begin.
The FCA has indicated that people who have already complained should be compensated within nine months and so should start to receive payouts before the end of 2026.
However, the watchdog also stressed that half of those eligible for compensation haven’t claimed yet due to confusion, but 81% say a clear scheme would encourage them to act.
The FCA previously said it wants to make the process simpler and fairer for those owed money and that’s why it’s now consulting on industry industry-wide redress scheme.
Motor finance firms are expected to pay out an average £700 to those wronged but many could be in line for payouts worth thousands.