Car Finance Mis-Selling: What Martin Lewis Says You Should Do Right Now

The FCA has confirmed a £7.5 billion redress scheme covering 12.1 million car finance agreements. If you took out PCP or HP finance between April 2007 and November 2024, there's a good chance you were overcharged, and you may not even know it.

Martin Lewis has already put 3.6 million complaints through his free template tool. Here's exactly what he says you need to do, and why doing it now matters even though payouts won't land until 2027.

What actually happened with car finance?

For years, car dealers could quietly inflate the interest rate on your finance deal. The higher they set it, the more commission they earned from the lender. Nobody told customers this was happening. Most people assumed the rate was fixed, like a price tag, and didn't try to negotiate.

These arrangements were called discretionary commission arrangements (DCAs). The FCA banned them in January 2021, but the damage was already done. Around 40% of car finance deals struck before that point are estimated to have included hidden DCAs.

The FCA has confirmed that motor finance firms broke the law by failing to properly disclose commission arrangements to customers.

Who is eligible to make a claim?

You need to have taken out a PCP or HP agreement between 6 April 2007 and 1 November 2024. Leased cars are not included. The vehicle needs to have been for personal use, or for a sole trader or small partnership with a loan under £25,000. Agreements by limited companies fall outside the scheme.

You can still claim even if you've fully paid off the finance, no longer own the car, or had the car repossessed. If you had multiple eligible finance deals, you could be owed multiple payouts.

One threshold applies: if the commission paid to the broker totalled less than £120 (before April 2014) or £150 (after April 2014), the agreement won't be eligible. The FCA considers such a small amount unlikely to have influenced anyone's behaviour.

How much could you get back?

The average payout is estimated at £830, up from earlier estimates of £700. That increase is down to higher compensatory interest rates and improved payout rates for older claims.

Of the 32 million car finance agreements taken out in this period, 14 million are estimated to have been mis-sold in some form. The final confirmed scheme figure is 12.1 million eligible agreements after eligibility criteria were tightened. The total scheme cost is estimated at £9 billion, with £7.5 billion going directly to consumers.

When will you actually get paid?

Not yet. The FCA's Sarah Pritchard told the Treasury select committee that legal challenges from three finance lenders will delay the scheme. Her direct words: payments will not be made "before 2027."

Martin Lewis has acknowledged that some delay is inevitable. But that doesn't mean you should wait.

What Martin Lewis says you should do right now

Submit a complaint immediately, even with the delays

Under the FCA's proposed scheme, companies will contact affected customers asking them to opt in. You don't technically need to complain to receive compensation. But if you complain before the scheme formally starts, your claim will be processed faster, and you could receive your payout up to three months earlier.

If you've already complained, the car finance firm has three months to write to you confirming you're included in the scheme. If you haven't complained yet, they have six months after the scheme launches to identify and contact you. Complaining now puts you in the faster queue.

The MSE free tool is available at MoneySavingExpert.com and costs nothing to use.

Do not use a claims management company

This is one of Lewis's clearest warnings. CMCs typically take up to 36% of any compensation they secure for you. On an £830 payout, that's nearly £300 gone straight away, for work you could do yourself for free in about ten minutes.

The FCA has already expressed serious concerns about how some CMCs and law firms are operating in this space. Regulators have removed or amended 800 misleading adverts, helped over 28,000 consumers exit CMC contracts free of charge, and pushed three CMCs to reduce unreasonable fees, protecting over 500,000 people.

The redress scheme is free to use. There is no reason to hand a chunk of your payout to a third party.

Watch out for scams using Martin Lewis's image

Fraudsters are already exploiting this story. One firm, Conclusive Financial Ltd (also trading as PCP Refunds), had its adverts banned specifically for using unauthorised clips of Martin Lewis to promote its services.

Be cautious of any unsolicited call, text or email offering you compensation. Legitimate schemes will not ask for upfront fees. If someone contacts you out of nowhere claiming to know you were mis-sold, treat it with scepticism.

Check if you got a "no DCA" response before 2025

If you complained earlier and the lender wrote back saying you didn't have a discretionary commission arrangement, that is not necessarily the end of the road. Until mid-2025, the FCA's investigation focused only on DCAs. Two new mis-selling categories were added last year: contractual ties and unfairly high commission. Together these cover around 4 million additional agreements.

If your earlier complaint was rejected on DCA grounds, it's worth putting in a fresh complaint under the expanded criteria.

Dig out your old paperwork

You'll need to identify the lender and your finance agreement details. If you don't have the original documents, check old emails, bank statements for repayment amounts, or contact the dealer you bought from. The lender's name should appear on any repayment correspondence.

A vehicle history check can confirm what finance was registered against a car, which can help you identify the lender if you've lost the paperwork.

How did we get here legally?

In October 2024, the Court of Appeal ruled that car sales firms couldn't lawfully receive commission from finance firms without the customer's "fully informed consent." This was a major expansion of the potential liability.

In August 2025, the Supreme Court partially walked that back, ruling that dealers don't have a fiduciary duty to act in a customer's interest. But the Supreme Court also upheld a separate part of the ruling, confirming that "excessive" commission remains unlawful.

The FCA then confirmed its final redress scheme on 30 March 2026. Three lenders immediately launched legal challenges, which is what's pushing payments into 2027.

The bottom line

If you had PCP or HP car finance at any point from 2007 to 2024, the odds that something was wrong with that deal are meaningful. Roughly 14 million agreements out of 32 million are estimated to have been mis-sold. The FCA has confirmed the scheme. The average payout is £830. The process is free.

The only thing that reduces what you get is using a CMC, ignoring the complaint window, or falling for a scam. All three are avoidable.

Submit your complaint now through MoneySavingExpert.com's free tool, keep a record of your submission, and wait for the lender's response.

Sources