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FCA Warns Consumers About Motor Finance Compensation Scams and Costly Claims Firms
The UK Financial Conduct Authority warns the public about scammers impersonating car finance lenders and reminds consumers that they do not need to pay third parties to claim compensation.
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Do not send money, disclose credentials, or use contact details supplied in an unsolicited message. Verify the organisation independently.
The Financial Conduct Authority (FCA) has launched a £1 million public awareness campaign to inform motor finance customers about upcoming compensation processes and warn them against financial scams and unnecessary fees from claims management companies (CMCs).
As part of its alert, the FCA highlighted that scammers have been actively contacting consumers while pretending to be legitimate car finance lenders. These fraudsters falsely tell victims that they are owed compensation, despite no formal redress scheme being active yet. The regulator urges anyone receiving unsolicited calls of this nature to hang up immediately and avoid sharing any personal or financial information.
According to research commissioned by the FCA, 79% of motor finance customers are aware they might be owed redress, but 41% mistakenly believe they must hire a CMC or legal firm to secure their money. The regulator warned that using third-party claims firms or solicitors can cost consumers roughly 30% of any compensation awarded.
To counter misleading claims and protect consumers, the FCA and the Solicitors Regulation Authority issued warnings regarding aggressive marketing practices and improper client verification. Between January 2024 and August 2025, the regulator required the removal or amendment of 396 misleading motor finance commission promotions.
The FCA plans to launch a formal consultation on the proposed industry-wide compensation scheme, with potential payouts expected to begin in 2026 if implemented. In the meantime, consumers who believe they were unfairly charged hidden commissions can file complaints directly with their lenders without incurring third-party fees.