Car finance compensation: are you owed money, and what to do now

Last updated: 5 August 2026

If you bought a car on finance in the last two decades, there is a reasonable chance you were charged more interest than you needed to pay — and that you were never told why.

The Financial Conduct Authority has set up a compensation scheme covering roughly 12.1 million agreements and £7.5 billion in redress, with an average payout of around £830. It is one of the largest consumer compensation exercises in British history.

It is also, right now, partly paused — and that fact is being exploited by an industry of claims firms who would like a third of your money. This guide explains what happened, whether you qualify, what to do today, and what to ignore.

We make nothing from this page. There are no adverts on it, no affiliate links, and no referral to any claims company. Every route we describe is free. That is rather the point.

What actually went wrong

For years, car dealers and brokers arranging finance could set your interest rate themselves. The higher the rate they set, the bigger the commission the lender paid them.

These were discretionary commission arrangements, and the incentive was obvious: the person cheerfully arranging your finance was quietly paid more for charging you more. Most customers were never told this was happening. The FCA banned the practice in January 2021.

The scheme now covers two situations: those discretionary commission arrangements, and other cases where commission was high or where the lender and broker had a contractual tie that was never disclosed to you.

Am I eligible?

You may be owed compensation if you financed a car, van or motorbike between 6 April 2007 and 1 November 2024 and were not told about the commission arrangement between the lender and the broker.

It covers ordinary finance agreements — PCP and hire purchase both count. It does not matter whether you still own the vehicle, and it does not matter that the agreement has long since ended.

Some agreements fall outside it:

If you are not sure who your lender was, three routes usually find it: old bank statements showing the monthly payment, the dealership that sold you the vehicle, or your statutory credit file, which lists closed agreements for six years.

The catch: the scheme is currently suspended

This is the part the advertising will not tell you.

In May 2026 the scheme was challenged legally, and in July 2026 the FCA partially suspended it. Until the Upper Tribunal process concludes, firms are not required to calculate compensation, pay redress, or even send you communications about money owed.

The tribunal hearing is listed for 14–18 December 2026 or 16–26 February 2027, with judgment expected in the months after that. Realistically, if the scheme survives intact, most payments land in 2027.

Some parts continue regardless. Lenders must still identify affected agreements, gather the commission data, tell people who fall outside the scheme that they do, and keep cooperating with the Financial Ombudsman Service.

What this means for you in practical terms: you can complain now and you should, because it puts you in the queue. But nobody — no lender, no solicitor, and emphatically no claims management company — can make a payment reach you before the courts have finished. Anyone promising otherwise is selling something.

How to claim, free, in four steps

1. Contact your lender. The FCA publishes a list of motor finance lenders with contact details and a free complaint template. You do not need to construct a legal argument — you are asking them to check your agreement against the scheme.
2. Wait for their response. They will tell you whether you are owed anything. Timings are uncertain while the suspension holds.
3. Reply within one month to accept or challenge what they offer.
4. Receive payment within one month of accepting.

If you have already complained, you are in the queue — you do not need to do it again, and you certainly do not need to appoint anyone to do it a second time.

Do I need a claims company?

No. The FCA’s own words are about as blunt as regulators get: “You don’t need to use a CMC or a law firm to take part in our scheme.”

Claims management companies can charge up to 36% including VAT of whatever you receive. On the average payout of around £830, that is roughly £300 of your money for sending a letter you could send yourself in ten minutes, using a template the regulator provides free.

There is a second, less obvious trap. People who have responded to several adverts over the years sometimes find they have unwittingly signed up with more than one claims firm — and end up facing fees from each. If you have ever filled in one of those “check if you’re owed £1,000s” forms, it is worth checking what you actually agreed to.

None of this means claims firms are unlawful. Some people genuinely prefer to hand over paperwork and forget about it. But you should make that choice knowing it costs roughly a third of your compensation, and buys you nothing you could not get free.

How much might I get?

The average is around £830 per agreement, but the spread is wide. Compensation is broadly calculated as an estimate of how much your interest rate was inflated — the FCA works on a discount in the region of 17–21% — plus interest on top, at the Bank of England base rate plus 1%, subject to a minimum of 3% a year.

So the size of your payout depends on how big the loan was, how long it ran, and how inflated your rate turned out to be. Several agreements over the years means several potential claims.

Key dates

Complaints made after those response deadlines get a five-month response window.

If you are told you are owed nothing

You are not out of options. You can ask the lender to review the decision, and if you remain unhappy you can escalate free to the Financial Ombudsman Service. The ombudsman is free to consumers, independent, and does not require a solicitor.

Watch out for

Cold calls and texts promising fast payouts. The scheme is suspended; speed is not something anyone can sell you.

“Sign here to check if you qualify.” Checking is free and you can do it yourself. A signature usually means a fee agreement.

Firms that are not authorised. Any claims management company operating in this space must be FCA-authorised. You can check the Financial Services Register before signing anything.

Anyone asking for payment upfront. Legitimate firms take their cut from your compensation, not your bank account today.

The short version

If you had car finance between April 2007 and November 2024, complain directly to your lender now, free, using the FCA’s template. Then wait for the courts. You will get the same outcome as someone who paid a claims firm £300 — you will simply keep the £300.

Figures and dates in this guide are as published by the FCA and correct at 5 August 2026. This is a live scheme subject to ongoing legal proceedings, and the position may change — check the FCA’s own pages before acting.

Just so you know: this guide is information and journalism, not financial advice, and we don't recommend specific financial products. Your circumstances are your own — if you need personal advice, speak to a suitably qualified adviser. Information was correct at the "last updated" date above but things change; always check the linked primary sources.

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