The Car Finance Scandal & Compensation, Explained

What happened?

Car dealers and brokers were often paid more commission for arranging a higher interest rate on your finance — without telling you. These were called discretionary commission arrangements (DCAs), and the FCA banned them on 28 January 2021.

Because the broker's pay went up with your rate, some people paid more interest than they needed to. The FCA later concluded that this conflict of interest created an "unfair relationship" between borrower and lender. The scheme targets three specific failures: an undisclosed DCA, a high-commission arrangement, or an undisclosed contractual tie.

On 1 August 2025 the Supreme Court ruled on undisclosed motor finance commission, applying the unfair-relationship test in section 140A of the Consumer Credit Act 1974. That judgment cleared the way for the FCA's industry-wide scheme rather than leaving each borrower to fight in court. Read the mechanics in what is a DCA, or the ruling in full on the Supreme Court page.

Who's affected?

You may be affected if you took out car finance between 6 April 2007 and 1 November 2024, where the lender paid commission to a broker, and you were not properly told about it. That covers a large share of PCP and HP deals from that period.

The FCA estimates around 12.1 million agreements qualify. That is not the same as 12.1 million guaranteed payouts — each agreement is assessed on its own facts, and around one in three qualifying cases is expected to hit a cap on the redress. Check the honest checklist on am I eligible before assuming you're in.

• Your agreement started between 6 April 2007 and 1 November 2024 (where commission was payable to a broker).
• You financed a car through a dealer or broker — not a direct bank loan you arranged yourself.
• You were not told about a DCA, a high-commission arrangement, or a contractual tie.
• The deal was not a 0% or minimal-commission arrangement (those are generally excluded).

How much redress — and how it's calculated

Redress is built around returning overpaid interest, plus interest on top, not a flat payout. The FCA puts the total at about £7.5 billion at a 75% uptake rate (a total bill to firms of about £9.1 billion), across roughly 12.1 million agreements.

Divided across qualifying agreements, the average is about £829 per agreement — an estimate, with roughly one in three capped. Your own figure depends on the size, rate and term of your deal: a large, long, high-rate PCP will tend to produce a larger number than a small, short, low-rate one. That's why a headline "average" can mislead.

Any figure you see is an estimate, not a promise — nobody is guaranteed a payout, and the amount depends on your own agreement. For a number tied to your own agreement, use the compensation estimator rather than a marketing claim.

How to claim (free)

You can claim for free, yourself, in two steps. First complain to your lender; if you're unhappy with the answer, escalate to the Financial Ombudsman Service. You do not need a claims-management company taking a cut.

A claims-management company (CMC) can take a big slice — often up to about 36% — of anything you get back. Doing it yourself keeps 100%. The lender and the ombudsman both deal with you directly, and there is nothing a CMC can file that you cannot file yourself.

Follow the steps on how to claim, and use our free letter template to write to your lender. The whole route costs nothing.

The timeline — and the legal challenge to it

The scheme opens in two waves: 30 June 2026 for agreements from 1 April 2014 onward, and 31 August 2026 for earlier agreements. If a firm does not contact you, you have until 31 August 2027 to complain.

One important caveat: on 1 May 2026 the FCA confirmed its scheme had been legally challenged, and said it would "defend it robustly as lawful." That challenge is about the lawfulness of the scheme's design, not a cancellation of payouts. Treat any timeline as provisional — payments are still expected, but the legal process may affect when they begin. We are not alarmist about this: nothing has been cancelled, and free DIY complaints continue to run regardless.

The two opening waves exist because the legal framework changed over time. Agreements from 1 April 2014 onward sit under a more recent regime the FCA considers straightforward to assess; earlier agreements (6 April 2007 to 31 March 2014) need extra checking, which is why that wave opens about two months later.

Read the latest on when claims will be paid, and check whether a claim deadline applies to your case.

What a redress figure actually looks like

Redress is the extra interest you paid because of the commission, plus interest on top to reflect the time you were out of pocket. Two deals that look similar can produce very different numbers.

Picture a £12,000 PCP over four years where an undisclosed discretionary commission added roughly 3 percentage points to the APR. The overpaid interest on a deal of that size and length can run into the low thousands before the cap, with 8% interest on top for the period you were out of pocket. On a smaller, shorter, lower-rate deal the figure is far smaller — sometimes a few hundred pounds.

Roughly one in three qualifying agreements hits a cap set by the scheme rules, so the final figure may be lower than a simple "extra interest plus 8%" calculation suggests. Any figure you see is an estimate, not a promise — nobody is guaranteed a payout, and the amount depends on your own agreement.

Claims by finance type and lender

Whatever your deal, the same scheme rules apply. Start with the page that matches your finance type or lender.

If your deal does not fit neatly into those buckets, start with the FCA scheme overview and the how to claim walkthrough — the same two-stage process (lender, then ombudsman) applies to every agreement in the 6 April 2007 – 1 November 2024 window.

• By type: PCP claims and HP claims.
• By lender: Black Horse, MotoNovo, Santander Consumer, Ford Credit, Close Brothers, Moneybarn and more.
• Special cases: you've sold the car, or your lender has gone bust.
• Process: the FCA scheme, the FOS process, and the complaint letter template.