Claiming if Your Car Finance Lender Has Gone Bust

Can you claim if the lender has gone bust?

Possibly — a lender closing doesn't automatically wipe out a valid claim, but where you send it depends on the firm's status. The first step is finding out what happened to the lender.

Some firms are bought by another company that takes on their obligations; some go into administration; some are covered by a compensation scheme. Each has a different route, and the FCA scheme (PS26/3) still applies to in-scope agreements regardless of the lender's current status.

The key point: your right to redress is about the agreement and the commission, not whether the original lender still trades. A closed lender can complicate the practical route, but it does not end the claim.

Where your claim goes

Your claim follows the firm: to a successor company, an administrator, or the FSCS. Which one applies depends on how the lender wound down.

If you're not sure which applies, how to find your lender and the FCA register are the right starting points.

The FSCS in plain English

The Financial Services Compensation Scheme (FSCS) is the UK's statutory compensation fund of last resort for failed financial firms. It can pay some regulated claims when a firm cannot.

The FSCS is funded by the financial services industry, not by taxpayers, and there is no charge to you for using it. It covers claims against firms declared in default — but there are limits on the amount, and not every agreement or firm is in scope. For motor finance commission redress under PS26/3, the interaction with the FSCS depends on the specific firm and the date.

In short: if your lender has failed and is FSCS-covered, the FSCS may step in; if the firm was bought or is in administration, the successor or administrator handles it. You still complain free, and you still do not need a CMC.

How to start

Find out the firm's current status, then send your complaint to the right place — for free. The basics of your case don't change.

1. Identify the lender and check whether it still trades, was bought, or has gone into administration — use the FCA register.
2. Send your complaint to the successor firm, administrator or FSCS as appropriate, using our letter template as a base.
3. If a regulated route applies, the Financial Ombudsman Service or FSCS may be able to help — for free.

Watch-outs with closed lenders

Closed lenders can mean lower or capped payouts, and slower timelines — but no fees if you DIY.

• Administration can mean creditors (including you) are paid a percentage, over time, and there may be a cap.
• FSCS limits apply — check the current FSCS limit for the relevant claim type.
• Don't pay a claims firm to do what the FSCS or administrator does free.
• Keep all paperwork — the more evidence you have, the smoother the process.

Estimate your position

Even with a closed lender, it's worth a free estimate before you start.

Try the compensation estimator, and read how to claim. Claiming is free and you can do it yourself: complain to your lender first, then escalate to the Financial Ombudsman Service. You do not need a claims-management company taking a cut.

How to find out what happened to your lender

The FCA register and Companies House tell you whether your lender still trades, was bought, or failed. Start there before sending anything.

If the lender changed name but still trades, you complain to the current firm. If it was bought, the buyer handles it. If it's in administration or failed, the administrators or FSCS take over.

1. Search the FCA register (register.fca.org.uk) for the lender's name — it shows current status and any successor.
2. If the firm is gone, search Companies House for the firm's fate (administration, strike-off, acquisition).
3. Check the FSCS website for any declaration of default on the firm.
4. Note any successor firm that took on the book — that's often who you complain to.

Time limits with closed lenders

Time limits can be tighter or less clear when a lender has failed, so it's worth acting promptly. Don't wait to find out the route before complaining.

The FSCS and administrators have their own cut-off dates for claims against failed firms, which can be shorter than the main scheme's 31 August 2027 deadline. Once you know the firm is gone, send a complaint quickly to the right body. A free DIY complaint preserves your position while you work out the details.

Any figure you see is an estimate, not a promise — nobody is guaranteed a payout, and the amount depends on your own agreement.

Successor firms: who actually owes you

When a lender is bought, the buying firm takes on its regulated obligations — including the duty to handle commission complaints. That's the law, not a favour.

A sale of a loan book transfers both the asset (your agreement) and the liability (the complaints against it). The successor firm cannot refuse to look at your complaint on the basis that 'it happened before we bought the book.' They step into the original lender's shoes for complaint-handling purposes, and the FCA scheme rules apply to them just as they did to the original lender.

In practice this is often the cleanest route: the successor is a going concern with a complaints process, and the scheme's timelines run normally. Use our letter template addressed to the new firm, quoting your original agreement number.

Administration: paid as a creditor

If your lender went into administration, you join the queue of creditors — which can mean a percentage of your redress, paid over time, and sometimes within limits.

An administrator's job is to divide what the failed firm has left among the people it owes. Your commission complaint is treated as a claim in that process. You may receive less than the full scheme figure, and you may receive it later, because administrators work through the book methodically. The FSCS may top up where the firm was covered and declared in default — see the next section.

File your complaint with the administrators using the letter template, and ask them to acknowledge it in writing. Getting on the creditor list early matters: administrators set deadlines for claims that can be shorter than the main scheme's 31 August 2027 cut-off.

FSCS limits and how they interact

The Financial Services Compensation Scheme can pay certain regulated claims against declared-in-default firms, up to a limit per firm. It's a safety net, not an unlimited pot.

The FSCS is funded by the financial services industry and is free to use. It pays out when a firm is formally declared in default and the claim type is one it covers. There are monetary limits that change over time and by claim type, so check the current FSCS limit for motor-finance-related claims. If your redress would exceed the limit, you may still claim the excess from the firm's administrator as an unsecured creditor.

One important nuance: the FSCS and the FCA scheme (PS26/3) interact, and exactly how depends on the specific firm and the dates involved. The FSCS website explains the current position for car finance commission redress; treat anything here as general information and check directly with the FSCS for your case.