If you’ve been waiting on a car finance compensation payout, there’s a further delay to be aware of. Martin Lewis gave an update on his ITV1 show this week, confirming that a court date has now been set for a legal challenge brought by four finance firms, and it’s not the sooner of the two options.
A bit of background for anyone who’s lost track of where this all stands. The issue centres on commission arrangements that were common in car finance deals for years, where dealers and brokers could receive a payment from the lender for arranging a loan, sometimes without this being made clear to the customer, and sometimes structured in a way that could push up the interest rate the customer paid. Following a wave of complaints and a Supreme Court ruling, the Financial Conduct Authority set out a redress scheme covering an enormous number of agreements, with firms expected to review cases and, where appropriate, pay compensation.
That’s where it had been heading, until a group of finance firms launched a legal challenge just as mass payouts were due to begin. This week’s update is about the timing of that challenge. The firms involved were given a choice between a December or February court date, and they’ve opted for February, which pushes things back further for anyone expecting to hear from their lender soon.
In terms of numbers, the scheme is expected to cover around 12.1 million finance agreements, a figure that’s actually come down slightly from earlier proposals as some deals were deemed ineligible. The average payout per driver per deal is expected to be around £829, which is notably higher than the £700 or so originally estimated. Total compensation across the scheme is projected at roughly £7.5 billion, assuming most eligible customers come forward to claim.
What does this mean practically if you think you might be owed something? Finance firms are still required to process complaints in the meantime, so it’s worth getting your claim in now rather than waiting for the legal challenge to resolve. What’s on hold is the actual payment of compensation, not the handling of your case. Getting your paperwork in early means you’re in the queue once payments do start moving.
One thing worth flagging: as this story gets more coverage, it’s exactly the kind of situation scammers like to exploit. If you’re contacted out of the blue by someone offering to “help” you claim, particularly if they ask for a fee upfront or for your bank details, treat it with real caution. Genuine claims can be made directly through your finance provider or the official FCA process, and there’s no need to pay anyone to get what you may be entitled to.
It’s a frustrating wait for a lot of people, and understandably so. But the scheme itself hasn’t gone away, it’s just been delayed again. If you had car finance in the years this applies to, it’s worth checking whether you’re likely to be covered, getting your claim registered, and then being patient while the legal side plays out.