Did You Buy a Car on Finance Between 2007 and 2024? You Might Be Owed £830

The FCA confirmed it on 30 March 2026: a £7.5 billion redress scheme covering 12.1 million car finance agreements. If you took out a PCP or HP deal between 6 April 2007 and 1 November 2024, there's a reasonable chance you were overcharged, and the average payout works out at £830 per agreement.

More than 3.6 million complaints have already been submitted through MoneySavingExpert's free tool alone.

What actually happened?

For years, car dealers were acting as finance brokers behind the scenes. When they arranged your loan, many were quietly adjusting your interest rate upward so they'd earn a bigger commission. You weren't told. You thought you were getting a fixed deal.

These were called discretionary commission arrangements, or DCAs. The FCA estimates around 40% of all car finance deals struck during this period involved them. The regulator banned DCAs in January 2021, but the mis-selling criteria have since been expanded to cover deals right up to November 2024.

The total bill to lenders, including non-redress costs, is expected to reach £9.1 billion.

Who qualifies?

You may be eligible if you had a Personal Contract Purchase (PCP) or Hire Purchase (HP) agreement between 6 April 2007 and 1 November 2024, and you weren't properly told about at least one of three things:

A discretionary commission arrangement, where the broker could raise your interest rate to earn more commission.
A high commission arrangement, defined as at least 39% of the total cost of credit and 10% of the loan.
A contractual tie giving the lender exclusivity or first refusal, unless there were visible links between the manufacturer and dealer.

Leased vehicles are not covered. The vehicle must have been for personal use, or for use as a sole trader or small partnership with a loan under £25,000.

You can still claim even if you've fully paid off the finance, no longer own the car, or had it repossessed. If you had multiple finance deals in this period, you could be owed multiple payouts. The scheme also covers agreements held by people who have since passed away, so beneficiaries may be able to claim on their behalf.

The FCA estimates 37% of all agreements made during this period are eligible.

How much will you actually get?

For most people, compensation will be calculated as the average of your estimated overpayment and the commission paid, plus interest.

The FCA uses a percentage discount of the interest rate you paid as the basis for the estimated loss. That figure is 17% for agreements from April 2014 onwards, and 21% for earlier ones. The average has risen from the previously cited £700 to £830, partly because of higher compensatory interest rates being applied to older claims.

At the more extreme end, around 90,000 consumers whose cases closely match the Johnson Supreme Court ruling will receive redress covering all commission plus interest. These are cases involving an undisclosed contractual tie and very high commission of at least 50% of the total cost of credit and 22.5% of the loan.

Which lenders are most exposed?

Lloyds Bank, through its Black Horse subsidiary, is the largest player in UK car finance and faces the biggest exposure. It has already set aside £1.2 billion to cover potential claims.

Santander has provisioned £295 million. Other lenders with significant exposure include Close Brothers, MotoNovo Finance, Barclays Partner Finance, Honda Finance, and BMW Financial Services.

Lloyds, Santander, and Barclays have all confirmed they won't challenge the FCA's redress plan in court.

Why is it taking so long?

The scheme was originally expected to launch in July 2026. It's now likely to be delayed until at least November 2026, because of four separate legal challenges.

Three come from car finance lenders: CA Auto Finance, Mercedes-Benz Financial Services, and Volkswagen Financial Services. When asked about the basis of their challenges, Mercedes-Benz and CA Auto Finance said they couldn't comment on ongoing legal matters. Volkswagen told MoneySavingExpert it had "identified issues that require independent clarification" from the courts.

The fourth challenge comes from Consumer Voice, a consumer group that wants payouts to be higher, not lower.

If the legal challenges succeed, the FCA may have to revise its plans, or consumers might need to resolve complaints through the Financial Ombudsman Service or the courts instead. The FCA says its scheme is "the quickest, fairest and most cost-effective way" to compensate consumers, and has committed to defending it in court.

If the scheme is upheld but challenges drag on, payouts are unlikely to arrive before 2027.

Is this bigger than PPI?

PPI is still the benchmark for UK financial mis-selling scandals. Banks paid out more than £38 billion over two decades. Car finance, at a projected £9.1 billion total, is a smaller figure, but the pace is notably different. PPI unfolded slowly over many years. This one is moving fast, with regulators, lenders, consumers, and courts all tangled up simultaneously.

For anyone who lived through PPI claims and came out with a meaningful refund: this one works the same way, and it's free to do yourself.

How to claim without losing 30% to a claims company

You do not need a claims management company or law firm. If you use one, you could lose more than 30% of whatever you receive. The process is free and straightforward.

Step 1. Work out who your lender was. Check old bank statements or contact the dealership where you bought the car. If you were still making payments after 2019, your credit report should show the lender. Equifax also has a free car finance checker app that shows agreements going back to 2007.

Step 2. Find your lender's contact details on the FCA website at fca.org.uk.

Step 3. Submit a complaint using a free template. MoneySavingExpert has one, as does Which? and Citizens Advice.

Step 4. The deadline to complain is 31 August 2027. Complaining before the scheme officially starts means you could receive compensation within three months of the scheme launching, rather than waiting up to six months.

Step 5. Once you receive an offer, you have one month to accept or challenge it.

If you do nothing, lenders are supposed to contact eligible customers by the end of February 2027. But there are 12.1 million agreements to work through. Complaining now puts you closer to the front of the queue.

The bottom line

If you took out a PCP or HP deal at any point in the last 17 years, it costs nothing to check and nothing to claim. The average payout is £830. If you had more than one deal, it could be significantly more.

Don't pay anyone to do this for you.

Sources