Martin Lewis has spoken out after a warning from the Financial Conduct Authority
Martin Lewis has warned that individuals pursuing compensation for mis-sold car finance deals may have been ‘misled’ during the claims process. The Financial Conduct Authority (FCA) revealed in March that around 12million vehicles were purchased under agreements that could now qualify for payouts.
The FCA unveiled a £9.1billion compensation scheme, encouraging those affected to lodge complaints and seek redress. However, legal challenges have caused delays, with many now not expecting progress until November 2026.
The Money Saving Expert (MSE) website, established by Mr Lewis, launched a free tool enabling people to submit complaints, though numerous other firms have introduced similar services that reportedly take a cut if claims succeed.
Following an FCA warning about ‘misleading’ advertisements from certain claims management companies (CMCs), Mr Lewis has cautioned claimants to exercise care when filing their complaints, reports Lancs Live.
He said: “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 continued: “In March, the financial regulator, the FCA, announced a £9bn mass redress scheme for 12m mis-sold motor vehicle finance agreements. We’ve a totally free complaint tool, but an avalanche of claims management companies (CMCs) have also been getting in on the act, and they take a chunk of any money you’ll be paid.
“The FCA has just warned against misleading CMCs, saying it has seen ‘far too many examples of poor practices’. It took the important symbolic step of launching a template letter for you to complain.”
What is it all about?
The entire matter concerns vehicles that were purchased when the buyer wasn’t informed about either a discretionary commission arrangement (DCA), a high-commission arrangement, or a right of first refusal.
A deal qualifies for a compensation claim if the driver wasn’t made aware of 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, except where the lender can prove there were visible links with the manufacturer and dealer.
Numerous people have already lodged complaints about these arrangements, and those who submitted theirs earlier will be compensated sooner. Firms have been given until the end of June 2026 to process complaints for loans taken out from 1 April 2014, and until the end of August 2026 for loans agreed before that date.
Individuals can either complain directly to their lender or utilise one of the many complaint tools now accessible. Some, such as the one on the MSE website, are free to use.
Others, including some highlighted in the FCA’s message, take a portion of the compensation if successful. This can exceed 30 per cent in certain cases.
The FCA statement
The FCA said: “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 action from the FCA, one firm has already agreed to take down all of their adverts. The FCA, working with its regulatory partners, will take further action to stop consumers being duped into signing up without the right information.
Firms must remove any content that misleads consumers and prevents them from making informed decisions. Firms are expected to take action to ensure any consumers that were misled into signing up are put back into their original position. This may include unwinding contracts for free.
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 else were they doing wrong?
Some of the other concerns highlighted 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 you should do now
If you are dissatisfied with the CMC you engaged, you should lodge a complaint directly with them. This can cover concerns about how you were signed up, whether you provided proper consent and were fully briefed on the situation, how your case was managed, how your personal information was handled, and the charges you’ve incurred. The FCA has created a template letter (DOC) to help with this.
The FCA emphasised that if you wish to withdraw now before any compensation has been awarded, 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 proper consent, misled or treated unjustly, you can request to terminate your contract free of charge and may also be entitled to compensation from the CMC or law firm.
If you’re unhappy with the firm’s response, you can take your complaint to the relevant independent Ombudsman. If the firm is regulated by the FCA, go to the Claims Management Ombudsman. If it is regulated by the Solicitors Regulation Authority, go to the Legal Ombudsman.