Car finance mis-selling: redress scheme could leave drivers “missing out on hundreds of pounds” 

Consumer Voice, an independent body which specialises in consumer rights, is challenging a compensation scheme from the Financial Conduct Authority (FCA) for drivers who were mis-sold car finance, after claiming it could leave some people hundreds of pounds out of pocket.

Those who took out car finance between 2007 and 2024 could be owed compensation, after it was found that some finance companies failed to disclose commission payments to dealers, which led to customers paying more than they should have. The FCA has launched a redress scheme to refund those who were mis-sold, but Consumer Voice says these measures are not enough.

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What is the car finance compensation scheme?

We have a full rundown of the FCA redress scheme which you can check out to get the whole story, but here’s a brief summary.

The FCA has found that some drivers who bought a car on finance between 2007 and 2024 may have had hidden commissions added to their deals which pushed up the amount of interest they paid.

There are around 12.1 million agreements being looked into under the new redress scheme, and the maximum payout to customers is set at £829.

Why is the redress scheme being challenged?

Consumer Voice is an independent company which specialises in helping consumers who have been treated unfairly by companies, and it believes the rules of the FCA’s redress scheme don’t fully reflect the losses suffered by drivers.

Alongside the 12.1 million agreements covered by the scheme, there are 4.7 million mis-sold agreements which are not included. Consumer Voice also says that the way compensation is calculated may fall short of what people are actually owed.

It says the formula uses benchmark interest rate adjustments and standardised assumptions about the amount buyers lost, which could “underestimate the scale of the overcharging”.

Alex Neill, co-founder of Consumer Voice, said:

“We support a redress scheme, but this one does not go far enough. Millions of drivers were overcharged through hidden and unfair commission, yet the FCA’s scheme risks leaving many of them missing out on hundreds of pounds they’re owed.”

What does this mean for you?

Consumer Voice is applying to the Upper Tribunal for a review of the FCA redress scheme, with the intention of challenging the way it has been designed. The aim is to still get the redress scheme up and running while the tribunal looks into the rules, so this review shouldn’t delay your compensation.

With the redress scheme still going ahead, don’t delay checking your eligibility if you think you’ve been mis-sold. You can apply for free through the FCA’s website, so don’t fall for any third-party company trying to charge you to claim compensation.

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