You may have to wait longer for car finance compensation, but it’s not all bad news

Have you been mis-sold car finance? Well, you may have to wait a while for compensation as the Financial Conduct Authority (FCA) has delayed its investigation into shady broker arrangements until May next year – over half a year later than expected.

Often described as the ‘next PPI scandal’, the whole issue surrounds the concept of non-disclosed Discretionary Commission Agreements: a deal between the finance lender and your dealer which allows the latter to secretly and artificially adjust interest rates to rake in more commission.

This practice was banned in 2021, however, the Financial Ombudsman, along with tens of thousands of complainants, called on the FCA to investigate. The review was announced in January 2024, with results expected to be published in September. 

However, with firms struggling to submit evidence and a judicial appeal by Barclays on a separate case surrounding car finance payments, the FCA has decided to delay its decision on any wrongdoing until May 2025.

Furthermore, the FCA has also extended the deadline for dealers and lenders to deal with complaints to “after 4 December 2025 at the earliest”. This means complainants could have to wait a lot longer to receive an outcome relating to their grievance and to receive any compensation.

In a statement, the FCA said that “if [we] can set out our proposed next steps sooner, [we] will”. Chief Executive of the National Franchised Dealers Association, Sue Robinson, told firms that the “NFDA would like to reiterate its support to its members and will be monitoring any further developments from the FCA and Financial Ombudsman Service on this issue”.

Despite the news of a delay, there is some light at the end of the tunnel; MonesySavingExpert’s Martin Lewis said: “The delay is disappointing – but could be a good signal”. The FCA suggested that it plans to launch a redress scheme. While the FCA has warned that it’s “too early to say if [we] will intervene in this way”, the concept of such a scheme should make the potential for payouts more secure in the long run.

This reflects the FCA’s previous open letter to banks and lenders in which it advised them to “maintain adequate financial resources at all times [to cover] any additional operational costs from increased complaints and, where applicable, to meet the costs of resolving those complaints”, with billions expected to accumulate in payouts.

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