The Financial Conduct Authority (FCA) is launching a £1 million campaign warning consumers about unnecessary fees when claiming car finance compensation. The financial watchdog is partnering with social media influencers to spread awareness that people do not need to pay claims management companies or law firms to access compensation.
The campaign targets consumers who may be entitled to redress from a motor finance compensation scheme covering car loans taken between 2007 and 2020. The FCA believes many motor finance firms broke rules by failing to properly disclose commission payments to dealers, potentially resulting in unfair interest rates for customers.
Influencer partnership strategy
The awareness drive includes radio and online advertising alongside social media content from multiple influencers. Cameron "Cazza" Smith shared an Instagram video on Friday warning followers they could "lose more than 30% of your compensation" by using claims management companies that charge fees.
Additional influencers will post information across Instagram and TikTok over the next two months. The FCA hopes to begin paying compensation to affected drivers next year through what it describes as a "free, easy-to-access" scheme.
Direct complaint process
Sheree Howard, executive director at the FCA, said the regulator is concerned many people are unaware they can claim compensation without paying intermediary fees. "We'll set out plans for a free, easy-to-access motor finance compensation scheme," Howard said. "If you do, you could lose over 30% of any money you're owed."
People can make complaints about commission on their car finance agreements by contacting their lender or broker directly. The FCA estimates most people would receive less than £950 in compensation if the scheme proceeds.
A consultation document detailing how the scheme will operate is expected to be published in October. The regulator is currently consulting on the industry-wide redress scheme for affected consumers.
Sources used: "PA Media" Note: This article has been edited with the help of Artificial Intelligence.
