The FCA is consulting on a compensation scheme for customers who were mis-sold car finance. Anyone eligible could receive an average of around £700 for each agreement. Find out who could get compensation, what you need to do next and why you should avoid claims management companies and law firms. 

• The FCA is consulting on a compensation scheme for millions who were mis-sold car finance. 
• Around 14 million car finance agreements from between 6 April 2007 and 1 November 2024 are likely to be eligible for compensation. 
• You’re likely to get a payout faster if you’ve already complained or if you complain nowOpens in a new window, before the scheme begins. 
• You’re likely to be eligible for compensation if your agreement had a discretionary commission arrangement (DCA), unfairly high commission or a contractual tie you weren’t told about. 
• Payouts are likely to begin in mid-2026 at the earliest. 
• You don’t need to use a claims management company or law firm to get your money. 
• Beware of scammers, as some fraudsters are using the mis-sold car finance news to get people’s money or details 
• Learn more about complaining if your agreement had a DCA, and complaining if your agreement had undisclosed commission.

Claiming compensation you’re owed won’t cost you anything if you do it yourself. 

You might have seen adverts for companies who can claim compensation on your behalf. These companies normally take a large cut of any compensation – up to 30%.    

A claims management company won’t be quicker or do anything you can’t do yourself – and avoiding them might save you £100s.  

If you’ve already signed up and want to cancel, check your contract as you may have to pay a cancellation fee. This should be fair and reflect the work they’ve already done. 

If you believe you were misled by advertising, charged unreasonable fees or treated unfairly by the company, you should complain to the firm first. If you’re unhappy with their response, you can raise your complaint with:

• the Claims Management OmbudsmanOpens in a new window or 
• the Legal OmbudsmanOpens in a new window

Under the FCA’s proposed scheme, you will be eligible for compensation if your motor finance agreement:

• included a discretionary commission arrangement (DCA)
• had unfairly high commission or 
• had a contractual tie - an arrangement between the lender and broker, giving them exclusive rights to provide credit. 

Your agreement only needs to have been affected by one of these to be eligible for compensation. It also needs to have been agreed between 6 April 2007 and 1 November 2024. 

Personal Contract Purchase (PCP) and Hire Purchases (HP) agreements will be eligible. If you leased a car through Personal Contract Hire (PCH), you won’t get compensation through this scheme. 

If your agreement had a DCA that you weren’t properly told about, it’s very likely that you’ll be owed compensation. You’ll be eligible so long as: 

• you took out motor finance (including cars, vans, campervans and motorbikes) between 6 April 2007 and 28 January 2021 - the date DCAs were outlawed  
• your agreement was either a Personal Contract Purchase (PCP) or Hire Purchase (HP) 
• your vehicle was bought for personal use.

DCAs were a hidden type of commission that allowed dealers and brokers to increase the commission they earned by charging customers more. 

The arrangement meant that a broker could set a higher interest rate on an agreement, meaning they would earn more in commission. 

DCAs were outlawed in January 2021. So, no car finance agreements made since then will include a DCA.

The best way to find out is to check through your car finance paperwork, if you still have it. If this isn’t possible, you can ask your lender.  

Even if your lender won’t tell you, they’ll still need to pay you compensation if your agreement included a DCA.   

Some firms have claimed that they never used DCAs. You can see a list of companies not using DCAsOpens in a new window on MoneySavingExpert. 

The FCA has provided guidelines for how they will decide if you paid an unfairly high commission.  

You will be eligible for compensation if your agreement included commission that was: 

• 35% of the total cost of credit, and 
• 10% of the overall loan. 

However, many agreements won’t have made these figures clear. You can either;  

• contact your car finance dealer to ask if you were charged unfairly high commission (and submit a complaint if you were), or  
• wait for the compensation scheme to begin, as lenders will contact affected customers asking them if they want to opt in for their agreement to be reviewed. 

Some motor finance agreements were mis-sold because a contractual tie existed. This means that the dealer had an agreement with a lender to only offer you their finance option rather than searching the market for a better deal.  

If you weren’t told about this, you’ll be eligible for compensation. To find out, you can either:

• contact your car finance dealer to ask if your agreement had a contractual tie (and submit a complaint if it did), or 
• wait for the compensation scheme to begin, as lenders will contact affected customers asking them if they want to opt in for their agreement to be reviewed. 

The FCA is currently consulting on the proposed compensation scheme. They’re expecting the scheme to begin in early 2026. 

Once the scheme starts, your lender will invite you to join the scheme within: 

• three months if you’ve already complained, or 
• six months if you haven’t complained. 

Once you’ve joined the scheme:

• your lender will confirm if you’re owed compensation, along with how much you’ll get, within three months 
• you’ll be paid the amount you’re owed within the next 28 days. 

It’s possible that some lenders won’t have contact details for affected customers. In this case, you’ll need to reach out to them and look to make a claim. 

You’ll have a year from when the scheme starts to contact your lender. So, if you aren’t sure if your lender has your details, it’s a good idea to get in touch with them and submit a complaint.

The FCA’s guidance is that anyone concerned that they weren’t told key details about their motor finance agreement should complain to their lender now, if they haven’t already. 

Customers who have submitted a complaint before the scheme begins will get compensation faster. 

Using a free template to submit a complaint means you can avoid claims management companies and ensure you get all of the money you’re owed. You can download a free complaint letter templateOpens in a new window from the FCA website. 

If you’re not sure who provided your car finance agreement, you can:

• check previous bank statements 
• contact the dealer where you got the car. 

If your agreement was active in the last six years, you can also check your credit report. Your provider may be listed in there. 

Car finance compensation is a big news story – unfortunately, this means fraudsters are contacting people to offer them compensation as a way to trick them into giving away their personal information.

Be extremely careful of any unexpected calls, messages or emails you receive claiming to be from car finance companies or the government. They might pretend you need to enter your bank details, personal information or credit card numbers to receive compensation – and then use this to steal your money or identity.   

The FCA hasn’t finished consulting on its compensation scheme yet, so anyone trying to gather your details so that they can pay you is not genuine. For now, you can safely ignore and report any messages of this kind.    

Learn more about what to watch out for in our guide Am I being scammed? How to tell if you’ve been targeted.

If you’re worried someone might have stolen your personal information or identity, read our blog post Could someone have stolen your identity?

 The FCA will be publishing information about its consultation and what it means for customers.  See the latest information from the FCA about car finance complaintsOpens in a new window, or call them on 0800 111 6768Opens in a new window.