Free compensation scheme

The Financial Conduct Authority (FCA) has set up a new compensation scheme for motor finance consumers who were treated unfairly by motor finance lenders. It is free to use.

The scheme says:

  • who gets compensation
  • how much they will get and when they will get it
  • who doesn't get compensation
  • you can claim without paying for help from a law firm or claims management company (known as a CMC).

Some lenders and other groups are challenging the scheme in court. Because of this challenge, some parts of the scheme have been paused.

This means that lenders do not have to pay compensation yet to people who are owed money or tell people how much they are owed. Lenders must still keep preparing for the scheme and let people know if they are not owed money at all.

If you have hired a law firm or claims management company

You might be using a law firm or a claims management company to help you get money back.

If you are using a law firm, they must:

  • check what the Supreme Court's decision and FCA's compensation scheme means for you and your claim
  • contact you and explain what it means in a way you can understand
  • tell you what your options are and whether you can use the FCA scheme
  • tell you what it means if your claim is going to court.

Remember, they may take some of your compensation as payment for their help.

Can I make a compensation claim myself?

You do not need a lawyer or claims company to make a claim. You can contact your lender directly to make your claim. Or, if you are eligible, you will be able to apply for free using the FCA's scheme.

What can I do now?

You could choose to:

  • use the FCA's free scheme; or
  • keep using your law firm or claims management company – make sure they tell you your options and you understand any costs you might need to pay; or
  • make your own claim by contacting your lender directly.

How is this different from other complaints?

This is not about general money matters, car problems or issues with your car dealer. It is only if you paid a lot extra because of a commission deal between the lender and the dealer and you weren’t told.

For other problems, talk to the dealer or use other help options.