How you can complain about car finance agreements

As the Financial Conduct Authority (FCA) continues its work on a proposed motor finance redress scheme, many consumers are considering whether they may have grounds to complain about the way their car finance agreement was sold.

While consumers have always been able to complain directly to their lender without using a claims management company, the proposed redress scheme has increased awareness of the different routes available. According to Mis-sold Expert, a UK claims management company, understanding those options can help consumers decide which approach best suits their circumstances.

Option 1: Make a complaint directly to your lender

Consumers can submit a complaint directly to the lender that provided their car finance agreement without paying a claims management fee. Managing the complaint yourself means you are responsible for providing any relevant information requested by the lender, responding to correspondence and deciding whether to accept any offer that may be made. For some consumers, particularly those with older agreements or finance from multiple lenders, gathering the necessary information may take additional time.

Option 2: Wait for the FCA's proposed redress scheme

The FCA has proposed an industry-wide redress scheme for certain motor finance complaints. If introduced, lenders may contact eligible customers directly where appropriate. Consumers who choose this approach would not normally need to take immediate action unless contacted by their lender. Any offer made would be considered by the consumer, who remains responsible for deciding whether to accept it or seek further guidance.

Option 3: Use a Claims Management Company

Consumers may choose to instruct a claims management company to manage the complaints process on their behalf. Services may include gathering information, tracing finance agreements where possible, corresponding with lenders and reviewing any offers received. Claims management companies charge fees in accordance with their terms and conditions if a claim is successful.

A spokesperson from Mis-sold Expert said: "Our message is simple. Consumers should know they have a choice when considering a car finance claim. Some people will be happy to deal directly with their lender, while others may prefer professional support. The important thing is understanding what each option involves before deciding which approach is right for them."

The proposed redress scheme

The FCA has completed its consultation and confirmed its final motor finance redress scheme. However, the decision is currently being legally challenged by several lenders and a consumer representative, with parts of the scheme temporarily suspended. Consumers should refer to the FCA’s latest guidance for the most up-to-date information and to understand whether the scheme may apply to them.

Choosing the right approach

Whichever route consumers choose, it is worth understanding what information may be needed, how the complaint process works, who will manage correspondence, whether any fees apply and who will review any offer before it is accepted. Taking time to understand these practical differences can help consumers make an informed decision about how they wish to pursue a complaint.

You can claim without using a claims management company, to your finance provider and then to Financial Ombudsman Service (FOS), for free. The FCA has introduced a free consumer redress scheme.