FCA warns of fake compensation calls

The watchdog warns of scam calls offering compensation for unlawful car finance deals as it considers a centralised redress scheme.

FCA warns about fake compensation calls tied to car finance

Regulators say scammers are calling people with claims that a compensation scheme exists for unlawful car finance deals, even though no central plan is in place yet. The FCA is starting a six week consultation on a centralised redress scheme and says most eligible motorists are likely to get under £950. If approved, payments could start next year.

Scammers are already taking advantage, with calls posing as car finance lenders offering fake compensation. The FCA says there is no compensation scheme yet and tells people to hang up and not share personal details. It warns that claims management firms can take up to 30% of any award. The final redress bill could reach as much as £18bn, with lenders to shoulder the cost if the plan moves forward.

The plan signals a shift toward simpler, faster redress for buyers who were sold unlawful deals. It also tests the balance between helping consumers and protecting lenders from big bills. Public protection relies on clear rules and swift action, not a maze of delays.

Public education on scams must keep pace with policy. If the scheme grows into billions, politics will watch closely, and any misstep could spark backlash or public anger. The outcome will depend on how well regulators communicate with drivers and how fairly the redress is designed.

Highlights

Public protection hinges on fast, clear rules and strong consumer education.