Families can claim for car finance compensation

New guidance from the Financial Conduct Authority (FCA) has opened the door for families to pursue car finance compensation for agreements held by deceased individuals. The FCA has confirmed that these eligible agreements can still qualify for the motor finance compensation scheme, prompting families to review the financial history of their deceased relatives. This initiative could affect an estimated 12.1 million car finance agreements, with average redress valued at £829 for each eligible agreement. If a family can demonstrate the authority to act on behalf of the deceased customer’s estate, they can initiate claims even after the person has passed away.

“Bank accounts, pensions, insurance and property are usually the first things families look for when managing an estate,” said Phil Thorpe, Lead Claims Handler at Mis-Sold Expert. He urges families not to forget about older personal contract purchase (PCP) or hire purchase agreements, which may have been overlooked if the relevant vehicle was disposed of before death. The FCA has made it clear that “eligible agreements can still be covered by the scheme after the customer has died,” reinforcing the importance of carefully examining all financial documents related to the deceased.

Families seeking compensation should begin by reviewing old bank statements and email records to identify lender names and car finance payments. Other steps include locating documents tied to PCP or hire purchase agreements, contacting known lenders, and preparing necessary evidence to prove their authority—such as wills or grants of probate. Important to note is that while significant sums may be at stake, the £829 estimate is merely an average, and actual payouts will be assessed on a case-by-case basis.

As the motor finance redress scheme develops, parts of it remain suspended due to legal challenges; however, firms are still obligated to adhere to existing rules and identify relevant complaints. Consumers can directly approach lenders without needing to engage a claims management company or solicitor, making it crucial to gather and submit the required information efficiently.