Brits who believe they were mis-sold car finance between 2007 and 2024 could be entitled to compensation averaging up to £1,400 per customer**.
Car buyers could be in line for more than £8 billion* in payouts under a compensation scheme proposed by the City watchdog, the Financial Conduct Authority (FCA). The authority estimated that the finance arms of banks and carmakers could pay out billions to compensate some car buyers impacted by undisclosed commissions between April 2007 and November 2024. Such buyers were not fully informed about the commission’s lenders paid to brokers, who were usually car dealers.
The predicted figure includes £8.2 billion* in compensation. If you think you might be among those mis-sold car finance in that period, you can contact Locksley Law to carry out a free, no-obligation agreement check.
Banks are braced for significant payouts, with Close Brothers having told lenders it has set aside £165m and Santander £295m, Reuters reports.
Lloyds, the biggest car finance company through its Black Horse brand, has set aside £1.95 billion, according to the BBC. Carmakers such as Mercedes-Benz and BMW have also set aside more than £500 million, the Financial Times reports.
In light of the potentially massive payouts, we've answered burning questions you may have.
The car finance scandal emerged after it was revealed that some lenders paid undisclosed “secret” commissions to dealerships. This allowed dealers to set interest rates on finance agreements, with higher rates earning them larger commissions. As a result, many customers may have agreed to finance deals with inflated interest charges.
An investigation by the FCA found that 44 percent of car finance agreements sold between April 2007 and November 2024 may be considered unfair because they involve inadequate disclosure. In a statement, the regulator said: “Motor finance companies broke laws and regulations in force at the time by failing to disclose important information. This led to unfairness, with consumers denied the chance to negotiate or find a better deal and, in some instances, paying more for their loan.”
You can see the FCA report here.
A 2024 ruling by the Court of Appeal raised the possibility of significant compensation liabilities for lenders, with some industry estimates suggesting potential costs of up to £44 billion. However, the bulk of that judgment was overturned by the Supreme Court in August last year. The ruling significantly reduced lender liability.
Following the ruling, the FCA is now expected to draw up the rules of a planned redress scheme.
Under a proposed FCA redress scheme, lenders could be required to pay out £8.2 billion*, with some estimates as high as £11 billion*. Affected customers could receive an average compensation of around £700* per claim.
Since Locksley Law launched in October 2025, their customers have had more than two claims on average. As per the FCA statement, each claim could be worth up to £700*, therefore an average client may receive payout of up to £1400**
Anyone who was mis-sold a car finance agreement between April 2007 and November 2024 may be able to claim. This includes Hire Purchase (HP) and Personal Contract Purchase (PCP) agreements that fall into one of the following categories:
If you believe you were mis-sold car finance, the FCA is proposing a free redress scheme expected to launch in 2026.
However, using the scheme will not be mandatory. Consumers may still choose to pursue legal action through the courts instead. You are under no obligation to make a claim via a law firm or claims management company.
If you had a PCP or HP agreement between 2007 and 2024, you can contact Locksley Law to carry out a free, no-obligation agreement check and see whether you could be owed compensation averaging £700*. Visit www.locksleylaw.co.uk for further details.
For those who prefer to use the FCA scheme, the regulator currently provides a template letter on its website for drivers who think they were affected. The FCA’s website offers guidance for those who believe their car, motorbike or van finance agreement was mis-sold during the relevant period. Once the scheme is in place, lenders will contact eligible customers with next steps.
*FCA statement figures as an estimate from the FCA.
**According to the latest statistics (March 2026), Locksley Law customers now have an average of 2.6 claims each, meaning they could be owed £1,400 or more.
Locksley Law is a trading style of RH Law Ltd, authorised and regulated by the SRA (No. 659355). You do not need to use a Claims Management Company (CMC) or a Law Firm. You can complain directly to your lender or to the Financial Ombudsman Service free of charge or redress may be available for free via the FCA's proposed consumer redress scheme. Lenders have until 31st May 2026 to respond to eligible complaints. Solicitor fees, if used, are up to 15% - 30% excluding VAT of any successful claim.