FCA has received recent reports of scammers calling people and offering fake compensation
Millions are being urged to stay alert for fraudsters claiming to be car finance lenders with false offers of compensation. The Financial Conduct Authority (FCA) has reported recent instances of scammers contacting people, offering fake compensation in return for personal details such as their name, address, date of birth and banking information.
This comes on the heels of the FCA’s recent announcement regarding a potential car finance compensation scheme. However, the city regulator is emphasising that no such scheme is currently in place. It also stated that car finance lenders have not begun contacting customers about compensation. People are being encouraged to immediately end any such calls and refrain from sharing any personal information.
Scam calls and texts should be forwarded to 7726. Many banks have adopted the easy-to-remember 159 phone number service, which connects people directly to their bank if they have concerns about suspicious contact., reports the Daily Record.
Nisha Arora, director of special projects at the FCA, said: “We’re aware of scammers calling people and posing as car finance lenders, offering fake compensation and asking for personal details. There is no compensation scheme in place yet. If anyone receives a call like this, hang up immediately and do not share any information.”
The Financial Conduct Authority (FCA) recently revealed plans to consult on a compensation scheme. Previously, it was noted that many motor finance firms were not adhering to rules or the law by failing to provide customers with important information about commission paid by lenders to car dealers who sold the loans.
Car finance compensation in a nutshell
Motor finance customers could be in line for a payout following the FCA’s announcement that it will consult on an industry-wide compensation scheme. The FCA has stated that many motor finance firms were not complying with rules or the law by not providing customers with relevant information about commission paid by lenders to the car dealers who sold the loans.
This follows a ruling by the Supreme Court on 1 August on cases in which the FCA had intervened. While some motor finance customers will not receive compensation because in many instances commission payments were legal, the court ruled that in certain circumstances the failure to properly disclose commission arrangements could be unfair and therefore unlawful, according to the FCA.
The FCA estimates that most people will likely receive less than £950 in compensation. The final total cost of any compensation scheme is estimated to be between £9 billion and £18 billion.
The consultation is set to be launched by early October. If the compensation scheme proceeds, the first payments should be made in 2026. People who have already made complaints don’t need to take any further action, the FCA confirmed.
Consumers who are worried that they weren’t informed about commission and believe they may have overpaid to their motor finance provider should lodge a complaint immediately. Consumers don’t need to engage a claims management company or law firm, and doing so could result in them losing around 30 per cent of any compensation awarded, it added.
In a recent post on X (formerly Twitter), consumer champion Martin Lewis wrote “there’s no harm in putting a DIY complaint now to see if you had a Discretionary Commission Arrangement”.
The FCA will propose regulations on how lenders should “consistently, efficiently and fairly” determine whether someone is entitled to compensation and the amount due, it said. It will monitor whether firms are adhering to the regulations and take action if they are not.
