Think you’re owed money from the car finance scandal? Here’s everything you need to know

Taken out car finance between 2007 and 2024? You could be owed on average £700 per agreement. Here’s everything you need to know about the FCA’s car finance compensation scheme.

If you took out car finance between 2007 and 2024, there’s a good chance you could get some money back – and it’s worth knowing how to go about it.

The average payout from the scheme might be around £700 per agreement, according to the Financial Conduct Authority (FCA). And in total, lenders could end up paying around £8.2bn to affected customers.

But what’s this all about? The FCA found that some car finance companies broke the rules by not being upfront about how certain deals worked. That lack of transparency meant some drivers missed out on fairer deals or ended up paying more for their car deals then they should have.

One of the biggest issues was related to commissions to the broker (in this case, your dealer). Here, a lot of companies didn’t properly tell people about these commission fees, which goes against the rules that are there to protect you.

A Supreme Court ruling in August 2025 said that while commission payments can be legal, failing to be upfront about them can sometimes be unfair – and even unlawful – in certain situations.

Following the court ruling, the FCA said it will set up a compensation scheme set to go live in early 2026. This would be a straightforward way for drivers to get what they’re owed without having to navigate complicated legal processes.

What’s more is that it would be free for consumers to access and much faster than going through the courts or the Finance Ombudsman.

Right now, a lot of people are holding back from making claims because they’re unsure if they’re eligible or how much they might get. Research shows that almost half (46%) of those aware of the issue say the rules aren’t clear enough, while 24% are put off by not knowing the potential payout. But there’s optimism too – 81% of people say they’d be more likely to claim if a clear scheme was in place.

FCA boss Nikhil Rathi said it’s time for lenders to make things right: “Many car finance lenders did not comply with the law or the rules. Now we have legal clarity, it’s time their customers get fair compensation. Our scheme aims to be simple for people to use and lenders to implement.”

He added that while not everyone will agree on every detail, the goal is to create a fair, efficient system that gets money to people quickly – and helps restore trust in the car finance market.

Want to learn more? This guide will show you what the scheme will look like, if you’re eligible for a refund, and what to expect along the way. Plus, we share tips on how to avoid scams when the scheme comes into play.

How will the scheme work?

If you took out a car finance agreement between 6 April 2007 and 1 November 2024, you might be due compensation – especially if you weren’t told that your lender paid commission to the broker (which is often the car dealer).

If you’re concerned you weren’t given the full picture about your car finance deal, we’d recommend you complain to your lender now if you haven’t already. Doing this early could mean you get your money back sooner once the official compensation scheme goes live.

There’s also no need to pay someone to claim for you

A big number of drivers don’t realise this: you don’t need to use a claims company or lawyer to make a claim. In fact, if you do, you could lose a chunk of any compensation you’re owed in legal fees.

Instead, you can make your own complaint for free using the FCA’s template letter, available on its website.

What happens once the scheme starts?

When the scheme officially begins:

• Lenders will contact anyone who’s already complained. If they don’t hear back from you within a month, they’ll automatically start reviewing your case.
• If you’ve already complained, you’re likely to get paid faster.
• If you haven’t complained yet, your lender will get in touch within six months of the scheme starting. You’ll then have another six months to decide if you want to opt in and have your case reviewed.
• If your lender can’t find you, you’ll still have a year from the scheme’s launch to make a claim directly.
• If you’re not sure who your lender was, the FCA’s website explains how to check. There’ll also be a nationwide awareness campaign once the scheme launches.

Who could get compensation?

You might be eligible for a refund if you weren’t told about one or more of these arrangements between your lender and broker:

• A discretionary commission – where brokers could increase your interest rate to boost their own commission.
• A high commission deal – where commission was unusually large (for example, 35% of the total cost of credit or 10% of the loan).
• A special or exclusive tie between the lender and broker, giving that broker near-exclusive rights to offer the lender’s credit.

In rare cases, a lender may argue that even if one of these features wasn’t disclosed, it didn’t cause any unfairness. But if there’s no clear evidence about what was explained to you, the lender must assume you weren’t told.

But what if you disagree with your lender’s decision?

The FCA will keep a close eye on lenders to make sure they’re sticking to the rules.
If you think your case hasn’t been handled fairly, you can take it to the Financial Ombudsman Service.

If your complaint doesn’t fit into the three arrangements covered by the scheme, you may not be owed compensation under it – but you can still take your case to court if you believe you’ve lost out.

5 tips to avoid scams

While this scheme could help many people get compensation, scammers often target such schemes to trick people into giving away personal information or money. Here’s how to stay safe when the scheme comes around.

1. Verify official communications

The FCA or your finance provider will never ask for payments upfront or sensitive details such as full bank passwords via email or phone. Always check the sender’s email address and contact the FCA directly through their official website.

2. Beware of unexpected calls or emails

Don’t trust unsolicited calls or messages claiming to be from the FCA or a claims company. Scammers often use pressure tactics to rush you into sharing information or paying fees.

3. Use official channels

Only submit claims through the FCA’s official website or approved redress platforms. Avoid third-party firms unless you’re 100% sure they’re legitimate.

4. Don’t pay to claim compensation

Genuine compensation schemes don’t charge you fees to apply or receive money. Be suspicious if anyone asks for payment upfront.

5. Keep personal information secure

Never share sensitive information such as your bank details, National Insurance number, or passwords unless you’re certain of who you’re dealing with.

In a nutshell

If you’ve used car finance, it’s worth checking whether you could be owed compensation. Start by making a complaint directly to your provider – you can do it yourself, for free. Keep an eye out for the FCA’s compensation scheme next year, which could make the process even easier.

Got questions or want to know more? The FCA and the Financial Ombudsman Service have plenty of resources to help you along the way.

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