Here it is – the news we’ve all been waiting for. After millions were mis-sold car finance between April 2007 and November 2024, the FCA (Financial Conduct Authority) has announced that those eligible will be able to receive an average of £829 in compensation.
We’ve rounded up everything we know about their redress scheme so far, including how to get your money back, below.
Who’s Eligible for the FCA’s New Car Finance Compensation Scheme?
According to the FCA, their new redress scheme could result in payouts for 12.1 million people who took out motor finance agreements between April 2007 and November 2024.
If any of the following applies to your agreement, you will be considered for motor finance compensation via the FCA:
- Your loan agreement included a discretionary commission arrangement (where the car dealer received a fee from lenders based on the interest rate charged to the customer) that was not disclosed to you.
- You were not told that your loan agreement included a high commission arrangement where at least 39% of the total cost of credit (including interest and fees) and 10% of the loan was paid to the dealer.
- Your lender failed to disclose contractual ties that gave them exclusivity or the right of first refusal.
How Do I Get My Money Back?
The FCA has set an implementation period for their redress scheme which motor finance firms must follow. You don’t need to use a claims management company (CMC) or law firm to make a complaint.
As the FCA only took over regulating the consumer finance market in April 2014, they have split the compensation scheme into two for legal protection:
- One scheme will cover car finance agreements taken out between 6th April 2007 and 31st March 2014.
- The other will cover agreements taken out between 1st April 2014 and 1st November 2024.
For the first scheme, motor finance firms have until the end of August 2026 to handle complainants’ cases. For the second, they have until the end of June 2026. People who have either already complained, or submit a complaint before the end of these two periods, should have a response from their lender within 3 months of those dates. This response should tell you whether you are eligible for compensation, and how much you will receive.
If you are timed out of the scheme or haven’t complained, but you are potentially owed money, firms have a further 6 months to contact you. You must respond within 6 months if you want to join the scheme.
What If I’m Not Happy/Not Contacted?
If you are not happy with the amount of compensation you have been offered, you can complain via the free Financial Ombudsman Service, which also checks that lenders are sticking to the rules.
If you haven’t been contacted at all, you can still complain to your lender until the end of August 2027.
Has Mis-Sold Car Finance Affected You?
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Car Finance Compensation: FAQs
No. The FCA’s new redress scheme allows people to complain, and potentially receive compensation, without the need for a solicitor or to go through the courts. However, their scheme could still be challenged by solicitors/lenders and if you do want to take a legal route, you still can.
£829 on average for mis-sold car deals between April 2007 and November 2024. But due to eligibility criteria being tightened, payouts could only happen for 12.1 million agreements (~38% of the total number taken out during that period).
Under the FCA’s new redress scheme, drivers will only be eligible for car finance compensation if they were not told about at least one of the three following arrangements between their lender and broker:
- A discretionary commission arrangement (DCA) which allowed lenders to increase the interest rate customers paid to secure a higher commission.
- A high commission arrangement of at least 39% of the total cost of credit and 10% of the loan.
- Contractual ties that gave the lender exclusivity or a right of first refusal – except where the lender can prove there were visible links with the manufacturer and dealer.
If you weren’t charged interest or a DCA wasn’t used to earn discretionary commission, you won’t be eligible for compensation.
