£9.1billion car finance payouts: Martin Lewis warns over claims firms

Martin Lewis has warned that many drivers chasing a share of the £9.1billion car finance compensation scheme may have been misled by the claims management companies (CMCs) they used to complain, according to the Daily Mirror. The founder of the Money Saving Expert (MSE) website spoke out after the Financial Conduct Authority (FCA) said it had seen "far too many examples of poor practices" among firms touting for car finance claims.

The regulator has now published a template letter that people can use to complain about a CMC, which Mr Lewis described as an "important symbolic step". The warning matters because some of these firms keep a slice of any payout. The Mirror reports that the slice can exceed 30 per cent in certain cases, while complaining yourself costs nothing.

The FCA said in March that around 12million vehicles were bought under agreements that could now qualify for payouts. Mr Lewis said that since then an "avalanche" of CMCs had been "getting in on the act", and that they "take a chunk of any money you'll be paid".

How the FCA says claims firms have been misleading drivers

The FCA said that, as part of a joint regulatory taskforce, it had found a growing number of adverts that look like independent advice from an individual but are really paid promotions from CMCs and law firms pushing motor finance claims. According to the regulator, some adverts do not say they are promoting a business. Some misuse logos or images linked to well-known companies, media outlets, public bodies or public figures to suggest an endorsement, and some fail to make clear that people can claim for free themselves. The FCA recently banned adverts from one CMC that used edited, unauthorised clips of Mr Lewis to make misleading claims about average car finance compensation.

The regulator also pointed to unwanted texts and emails, which it said had driven 6 million complaints to the Information Commissioner's Office this year. It said some people had been signed up without their knowledge or consent, for example by clicking a "free compensation checker" on social media. It also said some firms had made it hard to leave, chased fees aggressively, charged unfair exit fees or exaggerated how much work they had already done.

Alison Walters, director of consumer finance at the FCA, said: "Accessing compensation is free, and people don't need to use a claims management or law firm to get what they're owed." She added that choosing a firm should be "a genuine and well-informed choice, not one made because of a misleading advert". The FCA said one firm has already agreed to take down all of its adverts. It also said firms are expected to put misled customers back where they started, which may mean unwinding contracts for free.

Who can claim, and who could lose a slice of their payout

The Mirror reports that a deal qualifies if the driver was not told about at least one of three things. These are a discretionary commission arrangement (DCA), a high commission arrangement of at least 39% of the total cost of credit and 10% of the loan, or a right of first refusal. A right of first refusal does not count where the lender can prove there were visible links with the manufacturer and the dealer.

Anyone who signed up with a CMC or a law firm that charges a percentage could lose a noticeable part of their compensation in fees. The free MSE tool and a complaint made directly to your lender cost nothing. The Mirror reports that people who complained earlier will be paid sooner.

Key numbers

• £9.1billion: the size of the compensation scheme the FCA unveiled for mis-sold car finance.
• 12million: roughly how many vehicles the FCA says were bought under agreements that could qualify.
• 30 per cent: the cut some claims firms take can exceed this in certain cases, according to the Mirror.
• 39%: the share of the total cost of credit at which commission counts as a high commission arrangement.
• 10%: the share of the loan that commission must also reach to count as high commission.
• 6 million: complaints to the Information Commissioner's Office this year driven by unwanted texts or emails, according to the FCA.

Lender deadlines and the wait until November 2026

According to the Mirror, firms were given until the end of June 2026 to deal with complaints about loans taken out from 1 April 2014, and until the end of August 2026 for loans agreed before that date. The paper also reports that legal challenges have caused delays, with many now not expecting progress until November 2026.

On the claims firms themselves, the FCA said it would work with its regulatory partners to take further action to stop people being duped into signing up without the right information. It said firms must remove any content that misleads consumers and stops them making informed decisions.

What you can do now

If you think a past car finance deal fits the rules, you can complain directly to your lender or use a free tool such as the one on the MSE website. The FCA has said you do not need a claims firm or a lawyer to do this.

If you have already signed with a CMC and are unhappy, complain to the firm first. The FCA's template letter covers how you were signed up, whether you gave proper consent and were fully briefed, how your case was handled, how your personal information was used and the charges you face. If you believe you were signed up without proper consent, misled or treated unfairly, you can ask to end the contract free of charge and may be entitled to compensation from the firm.

If you are not happy with the firm's reply, take your complaint to the relevant independent Ombudsman. That is the Claims Management Ombudsman if the firm is regulated by the FCA, or the Legal Ombudsman if it is regulated by the Solicitors Regulation Authority.

Your questions answered

Can I cancel my claims firm agreement without paying

The FCA says that if you withdraw before any compensation has been awarded, you may have to pay a fee, but it must "be reasonable and reflect the work done". If you were signed up without proper consent, misled or treated unfairly, you can ask to end the contract free of charge.

Do I have to use a claims firm to get compensation

No. Alison Walters of the FCA said people do not need a claims management or law firm to get what they are owed. You can complain to your lender yourself or use a free tool such as the one run by MSE.

How do I know if my car finance deal qualifies

According to the Mirror, your deal may qualify if you were not told about a discretionary commission arrangement, a high commission arrangement or a right of first refusal. The FCA said in March that around 12million vehicles were bought under agreements that could qualify.