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UK regulators are taking action against companies suspected of sending millions of unwanted text messages about car finance compensation.
Car finance claims have become a big business for claims management companies. The Financial Conduct Authority (FCA) says more than 12.1 million car finance agreements could be eligible for compensation. With average payouts of around £829 per vehicle, claims companies can charge success fees of up to 30% plus VAT, making it a very profitable market, similar to the old PPI claims industry.
As more people become aware that they may be able to claim compensation, many have reported receiving unexpected text messages, emails and phone calls encouraging them to start a claim.
While some firms operate legally, regulators are concerned that others may be breaking the law by sending marketing messages without permission or using misleading advertising to attract customers.
The Information Commissioner’s Office (ICO) recently searched homes and business premises linked to five organisations in London, Liverpool, Bolton, Burnley and Swansea. Officers seized mobile phones, laptops and business records as part of an investigation into suspected illegal marketing. The searches were carried out under warrant and form part of a wider investigation into companies believed to have breached data protection and electronic marketing rules.
The investigation follows a sharp rise in complaints. Since September 2025, the ICO has received more than 12 million complaints about nuisance marketing linked to car finance claims. It believes around 170 million text messages may have been sent over an eight-month period. The scale of the complaints has made it one of the largest investigations into nuisance marketing in recent years.
The action comes as millions of motorists check whether they could claim compensation over historic commission arrangements in some car finance agreements. This includes finance from lenders such as Black Horse, Stellantis Finance and Audi Financial Services, as well as several other lenders that offered car finance during the period under review.
The ICO is working with the FCA, the Advertising Standards Authority (ASA) and the Solicitors Regulation Authority (SRA) to improve standards in the claims industry and stop misleading marketing. By working together, the regulators hope to reduce unwanted marketing, improve consumer confidence and ensure that firms follow the rules when promoting their services.
The FCA has repeatedly reminded consumers that they do not need to use a claims management company or a solicitor to make a complaint. Motorists can contact their lender directly and complain free of charge. If a complaint is successful, they will receive the full amount of any compensation awarded rather than paying a percentage to a claims company. The regulator has also warned that claims management companies may charge fees of up to 30% plus VAT of any compensation received, which could significantly reduce the final payout.
Regulators have also been tackling misleading adverts. Since January 2024, more than 1,200 adverts promoting car finance claims have been changed or removed because they did not meet the required standards. Some adverts were found to exaggerate the chances of receiving compensation or failed to make it clear that customers could make a complaint themselves without paying a fee.
Consumers are being advised to be careful if they receive unexpected text messages, emails or phone calls offering compensation. Experts recommend ignoring messages from unknown companies, avoiding clicking on links in unsolicited texts and checking that any firm they deal with is properly authorised. Before making a claim, motorists should take time to understand their options, check who they are dealing with and avoid being rushed into signing any agreement.
The ICO has confirmed that its investigation is still ongoing and has not named the organisations involved. Anyone found to have broken the law could face enforcement action, including significant financial penalties. The regulator has also encouraged members of the public to continue reporting nuisance marketing, as this information helps investigators identify repeat offenders and take action against companies that fail to follow the rules.