The Channel Islands Financial Ombudsman says the compensation for car loans that is being offered in the UK does not apply to people in Jersey and Guernsey.
The CIFO has issued a statement, it says, to clear up confusion.
Millions of drivers wrongly sold motor finance agreements could receive around £800 compensation under a redress scheme put in the place by the UK Financial Conduct Authority.
It covers deal from 2007-2024, where consumers were overcharged because of discretionary commission arrangements (DCAs) with dealers.
Following an announcement by the FCA in March, it was expected that compensation would begin to be paid this year, but legal challenges could delay that.
The Channel Islands Financial Ombudsman says the islands do not have an equivalent statutory compensation scheme, and the FCA one doesn't apply here.
"We wish to clarify that the Channel Islands (Jersey and the Bailiwick of Guernsey) do not have a statutory compensation scheme equivalent to that being established in the United Kingdom.
"The redress scheme being put in place by the UK Financial Conduct Authority (FCA) for UK consumers of motor finance does not apply to consumers of motor finance in the Channel Islands."
The CIFO says consumers with a complaint about their financing deal can report it to the CIFO - but they must approach the loan provider, lender or car dealer first.
"If you have a complaint about financing you agreed to in connection with the purchase of a car or other type of vehicle, we may be able to review your concerns.
"Complaints about motor finance provided in the Channel Islands fall within the statutory remit of the Channel Islands to review. Where we find a complaint has merit, we can award compensation for loss incurred up to a maximum of £150,000.
"They must first be given the opportunity to resolve the issue directly with you. If you are unhappy with the outcome, or you do not receive a response within 3 months of raising your complaint with your dealer and/or lender, you can bring your complaint to CIFO for independent review."
Last month, Jersey Consumer Council reported an increase in visits to its website, where it has template letters that can be sent too car dealers and finance providers for people wanting to investigate potential commission issues in their agreements.
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