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 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. That is an estimate, and roughly one in three agreements is 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 large share, 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

Parts of the scheme have been suspended from 29 June 2026 while a legal challenge is heard, so lenders do not need to calculate or pay redress until it ends. If a firm does not contact you, the deadline to complain is 31 August 2027 under the scheme rules as made, which may change after the legal challenge.

On 1 May 2026 the FCA confirmed its scheme had been legally challenged, and said it would "defend it robustly as lawful." The challengers are CA Auto Finance, Mercedes-Benz Financial Services, Volkswagen Financial Services and Consumer Voice. The Upper Tribunal suspended parts of the scheme with effect from 29 June 2026 (the FCA announced this on 2 July 2026), and the hearing is listed for 16 February to 3 March 2027. Payouts are expected in 2027 at the earliest, if the scheme is upheld and the judgment is not appealed. If the scheme is quashed, complaints may go through a revised scheme or the normal complaints route. Either way, you can still complain to your lender for free now.

The scheme rules set two timetables 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 their implementation period ran about two months longer. Even with the suspension, lenders must still tell people who are not owed money by 18 November 2026 for agreements from 1 April 2014 where you complained by 30 June 2026, or by 18 January 2027 for earlier agreements where you complained by 31 August 2026, subject to limited exceptions.

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

For most people, redress is the average of the extra interest you are estimated to have paid and the commission, plus interest on top for 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. On our calculator's maths, with a final balloon of 30% to 40%, the extra interest on a deal of that size and length comes to roughly £900 to £1,000 before the scheme's method and cap are applied. Interest on top is simple interest at the annual average Bank of England base rate plus 1%, with a 3% minimum in any year. 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 interest on top" 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 to 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.