Car finance compensation: What you need to know about the FCA scheme

Landmark rulings by UK courts following the Financial Conduct Authority's (FCA) extensive review of over 32 million agreements confirmed that many car finance firms failed to adequately disclose these commissions, leading to a large-scale consumer compensation scheme.

The FCA has already published final rules for an industry-wide motor finance redress scheme, but the scheme isn't proceeding according to its original schedule because four legal challenges were filed in late April and early May 2026. 

The latest update is that payouts from the redress scheme will begin in November 2026.

What is the FCA car finance compensation scheme?

The FCA formally identified an extensive mis-selling of discretionary commission arrangements (DCAs), high commission agreements, and contractual ties in the motor finance market. 

The findings came from an FCA study in 2019, which concluded that these undisclosed arrangements created big financial incentives for brokers and car dealers to inflate interest rates and make customers pay more.

Based on their findings, the FCA announced the first-of-its-kind car finance compensation scheme in March 2026 to compensate motor finance customers who were treated unfairly because lenders and brokers failed to disclose important commission or exclusivity arrangements.

The redress scheme is free for consumers and is split into two schemes:

• Scheme 1 for agreements entered into from 6 April 2007 to 31 March 2014.

• Scheme 2 for agreements entered into from 1 April 2014 to 1 November 2024.

The scheme is built around three categories of undisclosed or inadequately disclosed arrangements:

• Discretionary commission arrangements, or DCAs, allow a broker to increase the customer's interest rate to earn more commission.

• High commission arrangements, where the commission was at least 39% of the total cost of credit and 10% of the loan amount.

• Contractual ties, where a broker used one lender or gave one lender a right of first refusal, unless the link between the lender, the manufacturer and the franchised dealer was already visibly obvious to the customer.

The FCA's redress model means that in the most serious, 'Johnson-like' cases, consumers get the commission back plus interest. In most cases, the FCA says redress will be the average of the estimated overpayment and the commission paid, plus compensatory interest.

Estimates now state that if 75% of eligible consumers come forward, car finance firms will pay about £7.5 billion in compensation.

Who is eligible for car finance compensation?

If you used motor finance for a car, motorbike, van or campervan on Personal Contract Purchase (PCP) or Hire Purchase (HP) between 6 April 2007 and 1 November 2024 and you weren’t properly told about a DCA, a high commission arrangement or a qualifying contractual tie between the broker and the lender, then you’ll be eligible to join the FCA car finance compensation scheme. 

The FCA states that only around 37% of agreements made in the relevant period are expected to be eligible, which works out to roughly 12.1 million eligible agreements.There are some exclusions, which you can read about here on the official FCA PDF explaining the motor finance consumer redress scheme.

How to find old car finance agreements

The FCA created practical guidance to help you find old car finance agreements.

Start with the obvious records first:

• Old bank statements for Direct Debits to see who you were paying your car finance to.

• Contact the dealer that arranged the finance.

• Look through any confirmation letters.

• Check your emails.

• Look for any paperwork you still have.

Credit reports are also a great tool. The FCA says your lender may be listed on your credit file, and it points consumers to free credit report access routes. Using Checkmyfile to find the information, for example, is a great option if the agreement was active in the last six years. Within that timeframe, your provider should usually be visible on your credit report.

Lenders don’t always report to all three of the UK’s main credit reference agencies: Experian, Equifax, and TransUnion. But with Checkmyfile, you see all your info from them in one place. Get started with a 7-day free trial. It’s then £14.99 a month – cancel online anytime. 

Note: An agreement that ended before roughly May 2020 may no longer appear on a standard credit report in May 2026. That is why older complaints often depend on bank statements, dealer records, and lender records.

What does a car finance agreement show on your credit file?

Your credit file is useful for identifying the account, but it isn’t designed to tell you whether the broker's commission was hidden or whether the lender breached disclosure rules.

Your credit report contains credit account information such as account names, balances and payment statuses. That means the file can help you prove an agreement existed and identify the lender if your agreement was active on or after May 2020, but it won’t usually show the commission structure that makes the agreement eligible for redress.

How to make a car finance redress claim

The FCA's official advice is to complain directly to your lender, which you can do for free, and not to go through a claims company. The FCA has provided a public lender directory with genuine contact details, complaint forms and template complaint letters or emails. 

Martin Lewis, who has led the charge for delivering information to the public, also published an helpful email template.

Keep in mind that using a claims management company (CMC) or a law firm to take part in the scheme won't help you get money any faster. The FCA warns that using a CMC or law firm can cost up to 36%, including VAT, out of any compensation.

Where possible, your complaint should include enough information for the lender to identify the agreement. Ideally, you should include:

• Your name.

• Previous names.

• Address history.

• Approximate dates of your car finance.

• Vehicle details.

• Any agreement reference number.

The FCA says the lender should first acknowledge the complaint and then tell you whether you are due compensation and how much. If you’ve already complained and have an acknowledgement from your lender, you don't need to do anything further at this stage.

But if you haven't complained yet, the lender was only meant to contact you if it believed you were likely to be owed money. Anyone not contacted has until 31 August 2027 to complain and join the scheme.

What's happening with the legal challenge to the scheme?

The scheme is still under challenge. On 1 May 2026, the FCA said it had received four legal challenges:

• One from Consumer Voice, represented by Courmacs Legal.

• One from Volkswagen Financial Services.

• One from Mercedes-Benz Financial Services.

• One from Crédit Agricole Auto Finance.

On 8 May 2026, the FCA said it was unclear when the cases would be heard but that it was unlikely to be before October 2026, meaning payouts should continue as planned from November 2026.

The challengers are asking the Upper Tribunal to remove all or part of the rules. They're arguing:

• The scope of the FCA's legal power to make the rules.

• The inclusion of agreements entered into before 1 April 2014.

• How limitation periods have been handled.

• The FCA's presumptions about unfair relationships and loss.

• The redress-calculation methodology.

• The way the integrity objective has been applied.

• Alleged interference with lenders' property rights under the Human Rights Act 1998.

The FCA's page was updated on 20 May 2026 to say it’s discussing with the Upper Tribunal and challengers whether some rules can be suspended while preparatory work continues. 

Despite ongoing legal setbacks and delays, you have until 31 August 2027 to make a claim. Use all of the available resources to find your car finance agreement details, and try to do it as soon as possible.