The Financial Services Compensation Scheme (FSCS) is stepping in to protect customers of Drive Direct Motor Group, who may have lost money after the firm went into administration.
FSCS is expecting most claims for compensation to relate to the return of premiums paid to Drive Direct where insurance cover was not put in place.
Loretta Minghella, chief executive of FSCS, said: "Most customers appear to have taken out GAP insurance, which covers the shortfall between what a motor insurer would offer and the original purchase price of a vehicle in the event that a vehicle is written off in a car accident.
"We would advise anyone who has had dealings with this firm since 14 January 2005, and thinks they may have lost money, to contact us."
