FCA launches £1m awareness campaign on motor finance compensation

The Financial Conduct Authority (FCA) is upping the pressure on claims management companies (CMCs), with a £1 million campaign emphasising consumers do not need to use a CMC or law firm to access any compensation due under any proposed industry-wide redress scheme for car finance mis-selling.

New research commissioned by the FCA shows that 79% of motor finance customers are aware that they may be owed compensation, while 61% know of a possible compensation scheme. However, half (41%) of those aware they may be owed compensation did not know they would not need to use a CMC or law firm if a redress scheme is introduced.

The research also found that of those motor finance holders aware of the possibility of being owed compensation, 25% have already made a claim and a further 39% intend to. Among those who have already made a claim, just under half (46%) did so using a CMC or law firm.

The regulator has repeatedly warned that using a CMC or law firm to make a motor finance claim could cost consumers around 30% of any compensation paid.

As part of the campaign launched this week, which will feature radio and online advertising, the FCA is teaming up with influencers, such as Cameron Smith (@cazza_time), to get the message across.

Over the next two months, a number of influencers will be posting information for consumers on their social media channels, including Instagram and TikTok. Online video and radio ads will launch in October.

Sheree Howard, executive director at the FCA, said: ‘We’ll set out plans for a free, easy-to-access motor finance compensation scheme.

“We’re concerned a significant number of people are unaware you don’t need to use a CMC or law firm to claim compensation. If you do, you could lose over 30% of any money you’re owed.’

The FCA has recently warned consumers about scammers pretending to be car finance lenders and falsely claiming that people are owed compensation, despite there being no car finance compensation scheme in place yet.

The regulator has also posted a number of Instagram videos answering key car finance questions, including what consumers should do if they have already signed up with a CMC or law firm and want to cancel.

The FCA has required CMCs to remove or amend 396 motor finance commission promotions between January 2024 and August 2025.

Details of the FCA consultation on the compensation scheme are expected in early October. If the compensation scheme goes ahead, the first payments should be made in 2026.