The money-saving expert’s comments echoed those of the Financial Conduct Authority
Martin Lewis was discussing the mis-selling of car finance(Image: ITV)
Martin Lewis has issued an urgent alert to anyone pursuing a car finance mis-selling claim, warning of a problem that could cost them roughly a third of their compensation. In a video shared on social media discussing his podcast, Mr Lewis cautioned about certain claims management companies (CMCs), which handle people’s compensation claims in exchange for a portion of any payout.
Mr Lewis’ alert follows the Financial Conduct Authority’s (FCA) concerns about ‘misleading’ advertising by some CMCs. The FCA revealed it had ‘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’.
The issue centres on the car finance mis-selling controversy, which has impacted approximately 12million vehicle purchases. A £9.1billion refund scheme has been set up.
Mr Lewis explained: “This is an important listen for anyone who’s put in a car finance mis-selling claim or is planning to. I got this email from Nikki. She says, ‘I tried to claim by myself using the form to be told a company had already done it on my behalf. I’ve not instructed anyone to do this on my behalf. I got in touch with the company and they want to charge me to close their case when I’ve never asked them to. Has anyone else had this?’.
“Well, yes, lots of other people had. In fact, this week, the regulator, the FCA, has launched a template letter for people who feel they have been misled by their claims management company.
“Here’s what I think’s happened. 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.
“I will be going through in this week’s podcast not just car finance mis-selling, how you claim if you haven’t already, whether you should be putting a claim in, and what to do if you have already claimed and how long the delay is going to be. But I’m also going to be talking about, bizarrely, the meta problem. People who have had problems with their claims management company who they used to claim because they were mis-sold car finance.”
Who is eligible to claim?
A finance agreement qualifies for compensation if the motorist wasn’t 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 there were visible links with the manufacturer and dealer.
Financial institutions have been granted until the end of June 2026 to process complaints for loans taken out from 1 April 2014 onwards, and until the end of August 2026 for loans arranged before that date. Individuals can either lodge complaints directly with their lender, or utilise one of the numerous complaint services now on offer.
Some, like the tool on the MSE website, are free to access. Others take a portion of any compensation awarded if successful. In certain cases, this can exceed 30 per cent.
The FCA Statement
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 saying they are promoting a business.
- Misuse logos, imagery or references linked to well-known companies, media outlets or public bodies or figures to falsely suggest their approval or endorsement. The FCA recently banned adverts from a CMC which used edited, unauthorised clips of Martin Lewis, Money Savings Expert, to make misleading claims about average car finance compensation.
- Fail to make clear that you can make a claim yourself for free.
Following intervention from the FCA, one firm has already committed to removing all of their advertisements. The FCA, working alongside its regulatory partners, will take further measures to prevent consumers being misled into signing up without proper information.
Firms must remove any material that deceives consumers and stops them from making informed choices. Firms are expected to act to ensure any consumers who were misled into signing up are returned to their original position.
This may include cancelling contracts free of charge.
Alison Walters, director of consumer finance at the FCA, commented: “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.”
Some of the other concerns flagged by the FCA include:
- Unwanted texts or emails, driving 6 million complaints to the Information Commissioner’s Office this year.
- Consumers being misled by adverts or signed up without their knowledge or consent — for example, by clicking a ‘free compensation checker’ on social media.
- Firms making it difficult for consumers to exit agreements where they have been misled into signing up, aggressively pursuing fees, charging unfair exit fees, or making exaggerated claims for work already done.
- Firms failing to keep clients updated, explain their options fully, or make clear that consumers can take a complaint to the relevant Ombudsman for free.
What should you do now?
If you’re dissatisfied with the CMC you used, you should raise a complaint directly with them. This could cover issues surrounding how you signed up, whether you gave consent and were fully informed, how your case was managed, how your personal data was handled, and the fees you were charged.
The FCA has put together a template letter (DOC) to assist with this process. The FCA emphasised that, should you wish to leave before any compensation has been paid out, you may be required to pay a fee. However, this fee must ‘be reasonable and reflect the work done’.
If you believe you were signed up without your consent, misled or treated unfairly, you can request to exit your contract at no cost and may also be entitled to compensation from the CMC or law firm.
Should you remain dissatisfied with the firm’s response, you have the option to escalate your complaint to the relevant independent Ombudsman. If the firm falls under FCA regulation, contact the Claims Management Ombudsman. If it is regulated by the Solicitors Regulation Authority, reach out to the Legal Ombudsman.