The Financial Conduct Authority (FCA) has issued a warning to motorists to be wary of adverts making “misleading claims” about car finance, amid concerns over how some firms are advertising on social media.

The regulator says a rising number of adverts appear to offer independent financial guidance or consumer advice when they are actually paid promotions designed to encourage people to sign up for claims services.

The warning comes as interest in the ongoing car finance scandal continues to grow, with increasing numbers of consumers exploring car finance claims, completing a car finance refund check and seeking information about potential car finance compensation linked to historic vehicle finance agreements.

FCA raises concerns over misleading promotions

The watchdog says some ads are not making it clear what their commercial intent is, which risks consumers not realising they are being targeted by a firm.

The FCA says it has also identified adverts that use branding, imagery and references associated with well known organisations or public bodies in ways that could wrongly suggest approval or endorsement.

Other adverts have failed to make clear that consumers can pursue complaints directly without paying a third party.

The regulator recently took action against a firm whose advertising contained misleading claims about potential compensation payouts [1]. Following intervention by the FCA, the business agreed to remove all of the adverts in question.

The FCA said firms must ensure that consumers receive clear, fair and accurate information so they can make informed decisions about how they pursue a car finance claim.

Consumers can complain for free

A key message from the FCA's latest warning is that motorists do not need to pay a representative in order to raise concerns about potential car finance mis-selling.

Consumers can contact lenders directly and access guidance through official channels without incurring fees.

Alison Walters, Director of Consumer Finance at the FCA, said consumers should only use a third party if they fully understand the costs involved and have made an informed choice [2].

"Accessing compensation is free, and people don't need to use a claims management or law firm to get what they're owed," Walters said.

"If they choose to, it should be a genuine and well informed choice, not one made because of a misleading advert."

The regulator also reminded consumers that some firms charge fees exceeding 30% of any compensation awarded [3].

The FCA has reminded motorists worried they may have been mis-sold car finance that they can complain to lenders directly, and do not have to pay a fee. This covers consumers who want to look into the possibility of a car finance refund or PCP refund. Some may wish to use a claims management company or legal representative, however, where they would rather have assistance during the process. The regulator has said it is only concerned that any decision taken is an informed one, and consumers understand what options are open to them and if there will be any costs involved.

FCA warns consumers about potential PCP claim scams and misleading adverts

The regulator's warning comes amid growing online interest in compensation related to vehicle finance agreements.

As more consumers search for information about a PCP claim or explore whether they may qualify for compensation, the FCA says it is important to be cautious of adverts that create a false sense of urgency or exaggerate potential outcomes.

The FCA says consumers should ensure they understand the purpose of any car finance refund check and review any terms provided before proceeding. This includes understanding what services are being offered, whether any fees may apply and what options are available to them.

The FCA says consumers should carefully consider their options before deciding how to pursue a claim. While many consumers choose to handle complaints themselves, others may prefer professional assistance. In either case, the regulator says decisions should be based on clear information and a full understanding of any fees involved.

Regulatory scrutiny of the claims sector increases

The warning forms part of a wider regulatory effort to address poor practices within parts of the claims market.

Earlier this year, a joint taskforce was launched to examine concerns about the handling of motor finance related claims. The FCA has also begun a broader review of the claims management sector [4] to identify the root causes of poor consumer outcomes.

Reports highlighted by the regulator include consumers being signed up without fully understanding the agreements they entered into, difficulties cancelling contracts, aggressive pursuit of fees and inadequate communication about available options.

The FCA also expressed concerns about unwanted marketing activity, with millions of complaints relating to unsolicited communications being reported to the Information Commissioner's Office over the past year.

As awareness of alleged car finance mis-selling continues to increase, regulators are paying closer attention to how firms market their services and interact with consumers.

Thousands of adverts removed or amended

The regulator says enforcement activity has already led to significant changes across the sector.

Since January 2024, more than 1,000 adverts have been removed or amended following regulatory intervention.

More than 28,000 consumers have also been able to leave agreements free of charge after concerns were identified about how they had been signed up.

In addition, three firms agreed to reduce unreasonable fees, helping protect more than 500,000 consumers.

Ten firms have accepted voluntary restrictions or changes to their business practices, including limits on onboarding new clients and amendments to advertising and fee structures.

The FCA has also confirmed ongoing enforcement investigations into two claims management firms [5].

What should consumers do?

The regulator says motorists should carefully review any agreement before signing up for assistance with PCP claims or other car finance claims. Consumers should understand how fees are calculated, what services are being provided and what alternatives are available before making a decision.

Consumers who believe they may have been affected by mis-sold car finance can raise concerns directly with lenders free of charge. They should also be wary of adverts that appear to offer impartial advice while encouraging them to sign contracts or provide personal information.

For those who choose to use a representative, the FCA says it is important to understand any fees, cancellation terms and contractual obligations before proceeding.

While much of the public discussion around the FCA car finance investigation has focused on compensation and the prospect of payouts 2026, the regulator's latest warning highlights a different concern: ensuring consumers have access to clear information and are not misled when deciding how to pursue a claim.

With a heightened focus on the claims management sector, the FCA says it wants consumers to be provided with clear information and to be able to make an informed decision about how to pursue their potential car finance complaint. Whether or not consumers decide to complain themselves or to seek expert assistance, the regulator says consumers should be able to access clear information about their options.

With regulatory investigations continuing and the wider compensation landscape still evolving, the FCA is encouraging motorists to take their time, understand their options and ensure any decisions about a car finance claim or PCP claim are based on clear, accurate and transparent information.

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References:

1. The regulator recently took action against a firm whose advertising contained misleading claims about potential compensation payouts - https://www.fca.org.uk/news/press-releases/fca-bans-cmcs-misleading-adverts
2. Alison Walters, Director of Consumer Finance at the FCA, said consumers should only use a third party if they fully understand the costs involved and have made an informed choice - https://www.fca.org.uk/news/press-releases/consumers-warned-about-misleading-car-finance-money-tips-claims-ads
3. The regulator also reminded consumers that some firms charge fees exceeding 30% of any compensation awarded - https://www.fca.org.uk/news/press-releases/regulators-taskforce-crack-down-poor-practice-motor-finance-claims
4. The FCA has also begun a broader review of the claims management sector - https://www.fca.org.uk/news/statements/fca-review-claims-management-practices
5. The FCA has also confirmed ongoing enforcement investigations into two claims management firms - https://www.fca.org.uk/news/press-releases/fca-launches-investigation-second-motor-finance-claims-management-company