If you bought a car on finance between April 2007 and November 2024, you may be owed compensation. Following a landmark Supreme Court ruling in August 2025, the FCA has confirmed a massive redress scheme affecting up to 14 million finance agreements – with an average payout of £700 per agreement.
Here's what you need to know – and how to claim yourself without giving 36% to a claims management company.
What's Happened? The Key Dates
August 2025: Supreme Court Ruling
The Supreme Court ruled that it was unlawful for car dealers and finance brokers to receive commission from lenders without clearly telling customers. This applies even if the dealer didn't have discretion over your interest rate.
This was the final appeal – the matter is now settled law.
The FCA's Response
Following the ruling, the Financial Conduct Authority (FCA) announced:
- A mandatory redress scheme launching in early 2026
- Finance companies must contact affected customers proactively
- Normal complaints handling resumes 31 May 2026
- An estimated £8.2 billion total industry bill
Who Is Affected?
You may have a claim if your finance agreement was taken out between 6 April 2007 and 1 November 2024 and the dealer or broker received commission from the lender that wasn't properly disclosed to you. This covers PCP (Personal Contract Purchase), HP (Hire Purchase), and conditional sale agreements. Most dealer-arranged finance during this period included commission, and the FCA estimates that 44% of agreements may qualify for compensation.
You're not affected if you had Personal Contract Hire (PCH), which is leasing rather than finance and isn't covered by the scheme. You're also not covered if you arranged finance directly through your bank without the dealer's involvement (no commission was paid), or if your agreement was after November 2024 when new disclosure rules came into force.
How Much Could You Get?
The FCA has calculated that the average affected consumer will receive around £700 per agreement. However, amounts vary significantly depending on the loan amount, the interest rate you actually paid versus what you should have paid, the length of the agreement, and how much commission was hidden.
Some claims could be worth several thousand pounds, especially for higher-value vehicles with longer finance terms where the hidden commission significantly inflated the interest rate.
The compensation calculation typically includes the excess interest you paid (the difference between your actual rate and what you should have been offered), plus 8% simple interest per year on that amount, and potentially additional compensation for distress or inconvenience.
Think you might have a claim?
Check if you're entitled to a refund under the Consumer Rights Act. Free, takes 2 minutes.
The Two Routes to Claim
Route 1: Wait for the FCA Scheme (Easier)
The FCA is setting up a proactive redress scheme:
What will happen:
- Finance companies must identify affected customers
- They'll contact you directly with a compensation offer
- You can accept, negotiate, or reject the offer
- If unhappy, you can escalate to the Financial Ombudsman
Timeline:
- Scheme launches: Early 2026
- Normal complaints handling resumes: 31 May 2026
Pros:
- Less effort required – they come to you
- Standardised calculation methodology
- No time pressure
Cons:
- May take longer to receive money
- Initial offers might be low (negotiate!)
Route 2: Complain Directly Now (Faster)
You don't have to wait. You can submit a complaint now and it will be queued.
What to do:
- Identify your finance company
- Submit a written complaint
- Wait for scheme to process it (after May 2026)
Pros:
- You're in the queue early
- Can escalate to Ombudsman if unhappy with response
Cons:
- Still won't be processed until May 2026
- No real speed advantage currently
How to Complain Yourself (Free)
You do NOT need a claims management company. Here's exactly how to do it yourself:
Step 1: Find Your Finance Details
Locate:
- The finance company name
- Approximate date of the agreement
- Vehicle details (make/model/registration)
- Agreement reference number (if you have it)
Don't have documents? Check:
- Old bank statements for direct debit names
- Free credit reports (Experian, Equifax, ClearScore)
- The dealer (they may have records)
- Request copies under GDPR (Subject Access Request)
Step 2: Write to the Finance Company
Send this complaint:
To: [Finance Company Complaints Department]
Subject: Complaint – Undisclosed Commission on Motor Finance
Agreement Reference: [If known] Vehicle: [Make/model/reg if known] Approximate Date: [When you took out finance]
Dear Sir/Madam,
I am writing to complain about a motor finance agreement I entered into through [dealer name] on approximately [date].
Following the Supreme Court ruling in August 2025, I believe:
- The dealer/broker received commission from you for arranging this finance
- This commission was not properly disclosed to me at the point of sale
- I paid a higher rate of interest than I otherwise would have
- This constituted a breach of duty and/or an unfair relationship
I understand the FCA has paused complaints handling until 31 May 2026, and that you will process this complaint under the forthcoming redress scheme.
I request:
- Confirmation of any commission paid to the dealer/broker
- A calculation of the compensation I am owed
- Payment of that compensation, plus 8% interest
I look forward to receiving your acknowledgment and being contacted when the scheme is operational.
Yours faithfully, [Your name] [Your address] [Email address]
Step 3: Wait for the Scheme
Your complaint will be acknowledged and queued. Once the FCA scheme launches in early 2026, it will be processed.
Step 4: Review Any Offer Carefully
When you receive an offer:
- Check the calculation methodology
- Compare to what you'd expect based on your loan amount
- Don't accept immediately if it seems low
- You can negotiate or escalate
Step 5: Escalate If Needed
If you're unhappy with the outcome after May 2026:
Financial Ombudsman Service
- Free to use
- Can award up to £430,000
- Decisions are binding on the lender
- Website: financial-ombudsman.org.uk
DO NOT Use a Claims Management Company
Claims management companies (CMCs) are aggressively advertising car finance claims right now. Avoid them.
They charge up to 36% of your compensation – which means on a £700 claim, you'd lose up to £252 in fees. On a £3,000 claim, that's up to £1,080 gone. And for what? CMCs simply send template letters (like the one above), wait for responses, and escalate to the Ombudsman if needed. That's exactly what you can do yourself, for free, in about 15 minutes.
The FCA's proactive scheme will contact affected customers directly – you don't need a CMC to find you or to file on your behalf.
If you've already signed up with a CMC, check your contract for a cooling-off period (usually 14 days) and the cancellation fee. If they haven't done any substantive work yet, consider cancelling. The FCA scheme makes CMCs largely unnecessary for this type of claim.
Common Questions
"I don't remember taking out car finance"
Check your credit report for free through Experian, Equifax, or ClearScore. It will show any credit agreements you've had.
"I can't find any paperwork"
You don't need it. The finance company must provide copies. Just identify them from your credit report or bank statements.
"I've already paid off the finance"
You can still claim. The scheme covers agreements from 2007-2024, regardless of whether they're active or finished.
"My finance is still active"
You can still claim. The complaint relates to how the agreement was sold, not whether you've finished paying.
"The dealer has closed down"
Your claim is against the finance company, not the dealer. They remain liable.
"I had multiple car finance agreements"
Each agreement is a separate potential claim. The average is £700 per agreement – multiple cars could mean multiple payouts.
"Will this affect my credit score?"
No. Complaining about mis-selling doesn't affect your credit rating.
"What about PCH/leasing?"
Personal Contract Hire (PCH) is not covered by this scheme. PCH is leasing – you never owned the car and it's regulated differently.
What About Time Limits?
They're Paused
The FCA has effectively paused normal time limits while the scheme is set up. You won't lose your right to claim by waiting for the scheme.
The Normal Rules (After May 2026)
Once normal complaints handling resumes:
- 6 years from the date of the agreement, OR
- 3 years from when you became aware of the issue
- Whichever is later
Given the publicity, the "became aware" date is likely to be 2024 or 2025 for most people.
What This Doesn't Cover
This article is about commission mis-selling, not:
- Faulty cars – different rights apply
- Rejecting a car on finance – separate process under Consumer Rights Act
- Section 75 claims – for faulty goods, not mis-sold finance
If your car is faulty, those are separate claims you can pursue alongside finance mis-selling.
Recommended reading
Timeline Summary
| Date | What Happens |
|---|---|
| April 2007 - Nov 2024 | Period covered by scheme |
| October 2024 | Court of Appeal ruling |
| August 2025 | Supreme Court final ruling |
| Early 2026 | FCA redress scheme launches |
| 31 May 2026 | Normal complaints handling resumes |
Key Takeaways
- Up to 14 million agreements affected – 44% may qualify
- Average compensation: £700 per agreement
- Don't pay a CMC – they take up to 36% for something you can do for free
- The FCA scheme will contact you – but you can complain now to get in the queue
- PCH (leasing) is not covered – only HP, PCP, and conditional sale
- Don't panic – time limits are effectively paused until the scheme is up
This article is about finance mis-selling compensation. If your car is actually faulty and you want to reject it, check if you qualify for our rejection service – that's a separate issue we can help with.
Related Topics
