Car finance scandal claim deadline EXTENDED until next year – check if you are owed thousands now
THE deadline to claim compensation over dodgy car finance deals has been extended into next year.
The Financial Conduct Authority (FCA) is carrying out an investigation into shady sales practices which saw millions of Brits potentially overpaying on their motors.
The probe was set to conclude in September of this year, but the watchdog has now announced that it won't finalise its report until May 2025.
When the investigation began, the FCA suspended the requirement for lenders to issue a final response to a complaint within eight weeks until after its conclusion were released.
Given the setback, this means that lenders will now not have to issue a final response to complaints until December 4 2025 "at the earliest".
According to the FCA, the delay has been in large part due to the fact that lenders have "struggled to supply the data we need within the requested time".
READ MORE ON THE SCANDAL
This, combined with a pending court case reviewing a particular complaint, has left investigators unable to complete their work by the initial deadline.
What is the FCA investigating and who is eligible for compensation?
What is being investigated?
The FCA announced in January that it would investigate allegations of "widespread misconduct" related to discretionary commission agreements (DCAs) on car loans.
When you buy a car on finance, you are effectively loaned the value of the car while you pay it off.
These loans have interest payments charged on top of them and are often organised on behalf of lenders by brokers - usually the finance arm of a dealership.
These brokers earn money in the form of commission - a percentage of the interest payments on the loan.
DCAs allowed brokers to, to a certain extent, increase the interest rate on a loan, which in turn increased the amount of commission they received.
The practice was banned by the FCA in 2021.
Who is eligible for compensation?
The FCA estimates that around 40% of car deals may have been affected before 2021.
There are two criteria you must meet to have a chance at receiving compensation.
First, you must be complaining in relation to a finance deal on a motor vehicle (including cars, vans, motorbikes and motorhomes) that was agreed before January 28 2021.
Second, you must have bought the vehicle through a mechanism like Personal Contract Purchase (PCP) or Hire Purchase (HP), which make up the majority of finance deals and mean you own the vehicle at the end of the agreement.
Drivers who leased a car through something like a Personal Contract Hire, where you give the car back at the end of the lease, are not eligible.
You can check whether you might be owed money and submit a complaint using Martin Lewis' free tool here.
However, it does also mean that motorists have more time to submit complaints, with the deadline to appeal your lender's response through the Financial Ombudsman set back.
Brits will now be able to take their case to the Ombudsman until July 29 2026 or up to 15 months after their final response is dated, whichever comes later.
The body is expected to announce a sizeable compensation package at the end of the investigation, with affected drivers potentially due "billions" in compensation.
Announcing the delay, the FCA said: "We're proposing to extend the current pause to the time firms have to respond to consumers about motor finance complaints involving a discretionary commission arrangement.
"We now intend to set out next steps in our review into the past use of DCAs in May 2025.
"Firms involved in our review have engaged with us constructively, but many have struggled to supply the data we need within the requested time.
"While we now have the necessary data, the delays mean we will not be able to set out next steps by the end of September 2024 as expected.
"Our next steps could involve consulting on a redress scheme."