The FCA has launched a £1 million car finance campaign to warn people of unnecessary fees.
The UK’s financial watchdog is teaming up with influencers as part of a £1 million campaign to raise awareness of the potential perils of car finance claim adverts. The Financial Conduct Authority (FCA) said it wants to let consumers know they do not need to use a claims management company (CMC) or a law firm to access its motor finance compensation scheme.
The regulator is currently consulting on an industry-wide redress scheme for consumers who lost out when they took out a car loan between 2007 and 2020. This is because it thinks many motor finance firms broke the law or its rules by not properly telling customers about commission paid to dealers, meaning people may not have got a fair interest rate on the deal.
It hopes to begin paying compensation to affected drivers next year. Consumer champion Martin Lewis has previously estimated this could be a payout of around £1,100 per person, per loan agreement.
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The new campaign will feature radio and online advertising, as well as working with influencers to help spread the message.
This includes Cameron ‘Cazza’ Smith who has shared an Instagram video message on Friday warning that people could “lose more than 30 per cent of your compensation” by going through CMCs who charge fees.
The FCA said a number of influencers would be posting information for consumers on their social media channels, including Instagram and TikTok, over the next two months.
Sheree Howard, executive director at the FCA, said: “We’ll set out plans for a free, easy-to-access motor finance compensation scheme.
“We’re concerned a significant number of people are unaware you don’t need to use a CMC or law firm to claim compensation.
“If you do, you could lose over 30% of any money you’re owed.”
People can make a complaint about commission on their car finance agreement by getting in touch with their lender or broker.
The FCA says that if its scheme goes ahead, most people would probably receive less than £950 in compensation.
Details of how the scheme will work is due to be set out in a consultation document published in October.
