Car Finance Scandal: Discover Eligibility for Compensation Now
Millions of motorists are set to receive payouts after a major ruling on mis‑sold car finance deals. The Financial Conduct Authority (FCA) has outlined who can claim and how much they may receive.
What happened
Before 2021, some brokers earned discretionary commission linked to interest rates. This encouraged higher rates for some buyers. The FCA banned those discretionary commission arrangements in 2021.
The watchdog found lenders and brokers often failed to disclose commissions. Legal action followed and the FCA concluded rules or laws were breached.
Scope and scale
Agreements between 6 April 2007 and 1 November 2024 are in scope. The FCA estimates about 12.1 million deals qualify. The average compensation figure is £829 per deal.
| Period | Scheme |
|---|---|
| 6 April 2007 – 31 March 2014 | First scheme |
| 1 April 2014 – 1 November 2024 | Second scheme |
Which arrangements required disclosure
Compensation will be considered only when customers were not told about certain arrangements. The FCA lists three such arrangements.
- Discretionary commission arrangement (DCA) that could raise interest for extra commission.
- High commission arrangements meeting set percentage thresholds.
- Contractual ties giving a lender exclusivity or right of first refusal.
High commissions are those equal to or above 39% of the total cost of credit and at least 10% of the loan.
Exceptions deemed fair
Certain cases will not qualify for redress. Examples include very small commissions and zero‑interest deals.
- Commission thresholds: £120 or less before 1 April 2014, or £150 or less after.
- No interest charged on the agreement.
- Discretionary arrangement not used to earn discretionary commission.
- Lenders can prove disclosure was fair or no loss occurred in limited circumstances.
How to make a claim
If you had an affected agreement, you should complain to your lender. The FCA recommends using its template complaint letter available online.
Filmogaz.com advises drivers to avoid claims management firms. Using them can cut more than 30% from a payout.
Consumer campaigner Martin Lewis has warned many people may not realise they were mis‑sold finance. If unsure, file a complaint with your lender first.
Timetable and payments
The FCA set a short implementation period to give firms time to prepare. For loans from 1 April 2014, firms need not act before 30 June.
For earlier loans, firms need not act before 31 August. Once those dates arrive, lenders have three months to tell customers if they are owed money.
- Those who have already complained, or complain by 31 August, should be among the first paid.
- Lenders should aim to pay these complainants by January 2027.
- The FCA expects most claims settled by January 2028.
Firms must contact customers likely owed money. They have until the end of 2026 to reach affected borrowers with loans from April 2014 onward.
For older agreements, contact must be completed by the end of February 2027. Consumers then have six months to respond to join the scheme.
Anyone not contacted has until 31 August 2027 to submit a claim.
Disputes and oversight
Nikhil Rathi, the FCA chief executive, said firms could start paying immediately. He added that rapid action would be welcome but unlikely.
Customers who believe a lender is not following the scheme can complain to the lender. They can also contact the Financial Ombudsman Service.
This guide helps drivers navigate the car finance scandal and discover eligibility for compensation now. Check your paperwork and file a complaint if you think you were mis‑sold a deal.
