Lenders accused of delay tactics that could deny fair compensation to mis-sold drivers

New evidence suggests lenders are using delay tactics that could slow down fair and timely compensation for victims of car finance mis-selling

Consumer law firm Slater & Gordon has accused major car finance lenders of using “underhand tactics” to delay and deny compensation for drivers mis-sold car finance, warning that the same firms responsible for the scandal are now being “trusted to clean up their own mess.”

In a new dossier shared with MPs, the firm sets out evidence of lenders refusing to engage over email, rejecting Letters of Authority, demanding unnecessary ID checks, and claiming key records have been deleted – practices it says could risk preventing thousands of consumers from receiving fair redress under the Financial Conduct Authority’s proposed compensation scheme.

Slater & Gordon’s Chief Operating Officer, Lizzy Comley, said lenders were “still doing everything they can to frustrate and delay compensation for the customers they misled,” adding:

“Despite all of that, these same firms are being asked to run the compensation process while publicly complaining that the scheme is too generous to consumers. It’s a remarkable situation: the perpetrators are being trusted to clean up their own mess.”

Consumer Voice co-founder Alex Neill backed the call for action, saying lenders had been told “time and again by regulators, the judiciary, and their own customers that their actions have broken the rules and caused real harm.” She added: 

“Drivers who were misled deserve fair compensation delivered quickly and transparently. The focus now must be on ensuring the redress scheme delivers fair and consistent outcomes for all affected consumers.”

Use our tool to check your eligibility to claim under the FCA redress scheme, and sign up for alerts so you stay updated on what to expect next.

Fresh evidence deepens the row over car finance redress

Slater & Gordon’s new dossier, Lender Misconduct in the Motor Finance Scandal, lands as tensions rise over how the FCA plans to deliver compensation to millions of drivers mis-sold car finance. The regulator’s proposed redress scheme follows an August Supreme Court ruling which confirmed that many lenders broke the law by hiding or inflating commissions on loans – unfair practices that cost consumers hundreds or even thousands of pounds.

But the industry is already pushing back. Several major banks and finance companies have warned that the scheme “goes too far” and will be too costly to implement. Slater & Gordon says those claims are little more than an attempt to distract from lenders’ own wrongdoing. The FCA itself has said that compensation is due because lenders “broke laws and regulations.”

Adding to concerns, both the FCA and the Finance & Leasing Association have admitted that lenders’ records are incomplete, in some cases going back to 2007. That raises the risk that thousands of drivers could be missed entirely or receive only partial payments. Slater & Gordon warns that allowing lenders to administer the process is “a recipe for large-scale injustice,” especially for vulnerable or unrepresented consumers who may not even realise they’re owed redress.

Six ways lenders are obstructing car finance compensation claims

Slater & Gordon, which is representing hundreds of thousands of drivers affected by the car finance mis-selling scandal, has identified six key tactics being used by lenders to delay or derail legitimate complaints – behaviour the firm says is preventing consumers from getting the compensation they deserve.

The evidence highlights lenders relying on outdated postal-only correspondence, rejecting valid Letters of Authority, demanding unnecessary ID checks, forcing claimants through cumbersome online portals, citing “deleted” records to avoid disclosure, and contacting consumers directly despite their having legal representation. Together, these practices add months to redress timelines and, the firm warns, risk leaving thousands of mis-sold drivers, especially vulnerable or unrepresented consumers, without fair or timely compensation.

The findings raise serious concerns for the millions of drivers who have already signed up with law firms or claims companies. As Consumer Voice research shows, more than 3.8 million people are already represented in car finance cases. If lenders continue to frustrate claims through delay tactics and poor record-keeping, these consumers could face slower, lower or inconsistent payouts despite having sought professional help to secure justice.

Are you owed money for a mis-sold car finance deal?

You may be entitled to compensation if you took out a car finance agreement – such as a hire purchase (HP) or personal contract purchase (PCP) – between 2007 and 2024.

Under the proposed scheme, a loan would be considered unfair where a lender or broker failed to properly disclose one or more of the following:

• A discretionary commission arrangement (DCA) – allowing brokers to increase your interest rate for more commission.
• A high-commission arrangement – where commission was equal to or greater than 35% of the total cost of credit and 10% of the loan value.
• A tied arrangement – where a lender had exclusive or near-exclusive rights to offer finance through a specific broker or dealership.

Use our tool to check your eligibility to claim under the FCA redress scheme, and sign up for alerts so you stay updated on what to expect next.

Car finance redress: Your questions answered

Read our consumer rights guide to find out more about your rights under the FCA car finance redress scheme, including who’s eligible, what compensation could look like and how to be ready when the scheme launches.