Martin Lewis says to wait for motor finance compensation—but here’s why that advice could cost you thousands

This week, the Financial Conduct Authority (FCA) made a shocking decision that could leave millions of motorists short-changed in the ongoing motor finance scandal. Instead of holding lenders accountable, the FCA has scrapped its review of unfair commission arrangements and handed the responsibility of determining compensation back to the very firms accused of wrongdoing.

In simple terms? The fox has been put in charge of the henhouse. And that’s bad news for consumers who’ve been mis-sold loans under secret commission schemes.

The Problem with the FCA’s Approach

Rather than ensuring fair and transparent compensation, the FCA has paved the way for delays, uncertainty, and potential underpayments. The regulator’s decision effectively allows lenders to mark their own homework, creating an unfair playing field where consumers will likely lose out.

Martin Lewis, often a trusted voice for consumer rights, has advised people to wait for lenders to contact them. Unfortunately, this is poor advice. He suggests that compensation will be paid out automatically, but history tells us that banks and lenders don’t operate that way. Many will drag their feet, rely on legal loopholes around data retention, and undervalue what they owe consumers.

Martin Lewis’s £1,140 Figure is Misleading

One of the biggest misconceptions being spread is that the average compensation amount will be around £1,140. The truth? Consumers could be owed far more. For example:

• Someone who took out a £10,000 car finance deal could be entitled to around £4,000 in compensation if they go through the courts.
• Someone with a £30,000 finance agreement could claim up to £11,000.

These figures are far beyond what the Financial Ombudsman Service or a potential redress scheme might offer. The reality is that pursuing a legal claim is the only way to ensure you receive what you are truly owed.

Why Waiting is a Risk

By waiting for lenders to reach out, victims of this scandal are putting themselves at risk of missing out on thousands of pounds. Many lenders will use delay tactics, hoping customers lose interest or miss deadlines. Others may attempt to offer lower-than-fair redress amounts, banking on consumers not knowing their full rights.

Instead of waiting, motorists affected by this scandal should take proactive legal action. The courts have already proven to be the best route for securing fair compensation, and firms like ours are ready to help consumers navigate this process.

The Bottom Line

The FCA’s latest move is a betrayal of consumer trust. It prioritises financial institutions over the rights of ordinary British citizens. Instead of ensuring justice, the regulator has handed power back to the lenders – the very entities responsible for the problem in the first place.

Victims of mis-sold car finance deserve swift, fair, and full compensation – not more delays and uncertainty. If you’ve been affected, don’t wait. Seek legal advice, understand your options, and take action to secure what you’re rightfully owed.

Amendment

Based on our latest direct engagement with the FCA we would like to provide an update on our previous article expressing concerns about the approach of the FCA and the misleading comments by Martin Lewis (article 12 March 2025).

The FCA has clarified it has not determined there will be a redress scheme. The FCA has also indicated that it has not determined the detailed design of any potential future redress schemes, including around obligations on lenders to automatically reach out and contact victims, nor processes based on lenders assessing claims of victims.

It is the FCA’s position that all substantive matters concerning a redress scheme will be dealt with through an open and transparent consultation process, which will be widely drawn. Courmacs Legal is extremely appreciative of the FCA’s working approach on these important, complex and fast-moving issues. Loss and distress to our clients and millions of other victims has been acute and prolonged and we appreciate the FCA’s working approach based on transparency and open engagement.  We look forward to continuing the constructive engagement with the FCA to assist the authorities to arrive at the fairest outcome for our clients and all victims.