Millions of UK drivers are being urged to stay vigilant after the Financial Conduct Authority (FCA) issued a stark warning about scammers posing as car finance lenders. On August 12, 2025, the FCA sounded the alarm following a surge in reports of fraudsters contacting people with bogus offers of compensation, all in exchange for sensitive personal details such as names, addresses, dates of birth, and bank information. The warning comes at a time of heightened anxiety and confusion, as many motorists await clarity on a potential industry-wide compensation scheme for car finance mis-selling.
According to the FCA, there is currently no compensation scheme in place for car finance customers. Despite recent announcements about a possible consultation and the widespread publicity surrounding the issue, the regulator emphasized that car finance lenders are not yet reaching out to customers regarding compensation. "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," said Nisha Arora, Director of Special Projects at the FCA, as reported by Insurance Edge and Credit Connect.
The scam attempts have been particularly brazen, often exploiting the uncertainty following a landmark Supreme Court ruling on August 1, 2025. This decision found that lenders are not liable for hidden commission payments in many car finance schemes, meaning a large number of contested claims will not go forward. However, the most serious cases—where commission arrangements were considered unfair and therefore unlawful—may still be eligible for compensation, as highlighted by The Independent.
In addition to the Supreme Court ruling, the FCA has announced plans to consult on a comprehensive compensation scheme. This consultation is set to launch by early October 2025, and if the scheme proceeds, the first payments are expected to be made in 2026. The regulator estimates that most individuals will likely receive less than £950 in compensation per agreement, with the total cost of the scheme projected to fall between £9 billion and £18 billion.
The proposed scheme will primarily address issues arising from Discretionary Commission Arrangements (DCAs), which were banned in January 2021. Individuals who entered into personal contract purchase (PCP) or hire purchase (HP) agreements before this ban may have been unknowingly subjected to DCAs. However, those with 0% interest rates or minimal commissions are unlikely to qualify for compensation. Cases directly related to the Supreme Court ruling will require individual assessment, with factors such as a customer’s vulnerability and the fairness of the commission amount influencing potential payouts.
The FCA has been unequivocal in its advice to consumers: do not share any personal information with anyone claiming to be linked to a compensation scheme or car finance lender. Instead, those who believe they may have been affected are encouraged to complain directly to their provider. The regulator has also shared guidance on how to make such complaints, noting that consumers do not need to use claims management companies or law firms, as doing so could cost around 30% of any compensation received.
Scam calls and texts should be reported by forwarding them to 7726, a service designed to help authorities track and combat fraudulent activity. For those worried they may have fallen victim to a scam, the FCA advises contacting Police Scotland on 101 and their bank. Many banks have also signed up to the simple-to-remember 159 phone number service, which connects concerned individuals directly to their bank if they receive suspicious contact.
Consumer champion Martin Lewis recently weighed in on the issue, advising, "there’s no harm in putting a DIY complaint now to see if you had a Discretionary Commission Arrangement." The FCA echoed this sentiment, emphasizing that people who have already complained do not need to take any further action at this stage.
While the compensation scheme is still in the consultation phase, the FCA has outlined plans to propose rules ensuring that lenders consistently, efficiently, and fairly determine whether someone is owed compensation and how much. The regulator will closely monitor the process and take action if firms fail to comply with the rules.
The recent spate of scam attempts has only added to the confusion and anxiety among motorists, many of whom are still reeling from revelations about widespread mis-selling in the car finance market. The FCA’s intervention is designed to protect consumers from financial harm while the details of the compensation scheme are finalized.
For many, the situation remains deeply frustrating. The Supreme Court’s ruling limited the scope of compensation for many claimants, but the FCA’s forthcoming scheme offers a measure of hope for those most seriously affected. However, the regulator’s repeated warnings are clear: do not trust anyone who contacts you out of the blue about compensation, and never share your personal information with unknown callers.
As the industry braces for the financial impact of the proposed scheme—potentially costing lenders up to £18 billion—consumers are left waiting for further details. The FCA has promised more information in the coming months, with a commitment to ensuring that any compensation process is transparent and fair.
In the meantime, the message from the FCA is simple but urgent: stay alert, protect your personal information, and report any suspicious contact. The stakes, both financial and personal, have rarely been higher for Britain’s millions of car finance customers.
With the consultation set to begin by early October and the first payments not expected until 2026, patience and vigilance will be key for those hoping to receive compensation. Until then, the FCA’s warning stands as a crucial reminder of the risks posed by opportunistic scammers in times of uncertainty.
