The sweeping UK car finance scandal has put millions in line for compensation after an investigation uncovered unfair practices in around 14.2 million motor finance deals between April 2007 and November 2024. The Financial Conduct Authority (FCA) estimates affected customers will receive an average of £700 per finance agreement, though individual payouts may vary.
Who is eligible?
You qualify if you took out a Personal Contract Purchase (PCP) or Hire Purchase (HP) finance deal for a vehicle intended for personal use within the timeline mentioned. Importantly, your agreement must have involved undisclosed or poorly disclosed commission arrangements between lenders and dealers the root of the unfairness. Eligibility holds even if your loan has ended, or you no longer own the car.
Why is compensation owed?
Brokerage fees, known as discretionary commission arrangements (DCAs), allowed dealers to add undisclosed commission costs to loans, making borrowing more expensive without customers’ knowledge. This lack of transparency prevented borrowers from negotiating or seeking better deals.
How to make a claim?
The FCA proposes a simplified complaint process where you file a claim directly with your lender using a provided template letter. Lenders must respond within three months after the scheme launches, expected early 2026, confirming eligibility and compensation amounts. Those with existing complaints will be included automatically unless they opt out, while others will be invited to join.
How much compensation?
The FCA’s estimate of £700 per agreement reflects an average balancing estimated overpayment with lender-paid commissions, plus interest. Some claims may be higher for particularly serious cases, while others lower or ineligible.
Key points to remember:
-
The scheme only applies to finance deals covered by unfair commission arrangements.
-
Compensation includes simple interest calculated from the date of overpayment to payout.
-
If dissatisfied, consumers can escalate disputes to the Financial Ombudsman Service.
-
The FCA expects firms to handle legacy complaints swiftly to resolve existing claims.
With the consultation period open into November 2025, now is the time for anyone suspecting they fell victim to mis-sold car finance agreements to prepare their documentation and submit claims. This scandal represents one of the largest consumer redress programs in UK financial history and could return billions in compensation over the coming years.
For millions of car buyers, it’s a chance to recoup unfair costs and push lenders to maintain clearer, fairer lending standards going forward.