Car Finance Compensation: The FCA Scheme Is Nearly Here – Do This Now

The FCA's car finance compensation scheme is nearly here. If you had PCP or HP car finance between April 2007 and November 2024, you could be owed around £700 per agreement, and there are practical steps you should take right now to make sure you don't miss out or pay unnecessary fees.

Where Things Stand

The FCA is finalising its compensation scheme rules by the end of March 2026. The pause on car finance complaints, which stopped lenders from having to deal with individual cases, ends on 31 May 2026. After that, lenders have a three-month implementation period to start paying out.

That means the first compensation payments could arrive as early as September 2026.

What's Changed Since the Scandal Broke

The original car finance post on this blog explained the Discretionary Commission Arrangement (DCA) scandal. Here's what's happened since:

• The Supreme Court confirmed that DCAs were unlawful where consumers weren't told about them
• The FCA launched a formal compensation scheme (not just individual complaints)
• An estimated £8.2 billion in total redress is expected across roughly 14 million agreements
• The average payout is approximately £700 per agreement, though some will be significantly higher

Should You Complain Now or Wait for the Scheme?

This is the key question. You have two routes:

Route 1: Complain Directly to Your Lender (Do It Now)

You can complain to your lender right now, for free. The advantage? Cases submitted before the scheme launches may be assessed sooner, potentially getting you paid ahead of the queue. Your lender must acknowledge your complaint and begin processing it once the pause lifts on 31 May.

Route 2: Wait for the FCA Scheme (Mid-2026)

The FCA scheme is designed to be simpler than individual complaints. You won't need to prove the exact commission amount: the scheme will apply standardised calculations. The downside is that millions of people will be using it simultaneously, so processing times could be longer.

Our Recommendation

Complain directly now. It's free, it puts you in the queue early, and you lose nothing by doing it. If the FCA scheme turns out to be faster, you can switch. But if your lender resolves your complaint before the scheme launches, you get paid sooner.

Do NOT Use a Claims Management Company

This needs saying clearly: you do not need to pay a claims management company (CMC) to make this claim for you. CMCs charge up to 36% of your compensation (including VAT). On a £700 payout, that's £252 going to someone for filling in a form you could do yourself in 15 minutes.

The FCA has explicitly warned consumers about unnecessary CMC fees. Everything you need to claim is available for free, either through your lender's complaints process or the FCA scheme.

Step-by-Step: How to Claim Now

Step 1: Work Out If You're Eligible

You may have a claim if:

• You had PCP (Personal Contract Purchase) or HP (Hire Purchase) car finance
• The agreement was made between April 2007 and November 2024
• The finance was arranged through a car dealer (not directly with a bank)
• You weren't told about the commission arrangement, or the commission incentivised a higher interest rate

Even if you've already paid off the car, you can still claim.

Step 2: Find Your Lender

Check old paperwork, bank statements, or your credit file for the name of the finance company. Common lenders include Black Horse (Lloyds), Santander Consumer Finance, Close Brothers, MotoNovo, and Alphera (BMW Financial Services).

Step 3: Submit Your Complaint

Write to your lender's complaints department. You need to include:

• Your name and contact details
• The finance agreement number (if you have it)
• The approximate date and vehicle
• A statement that you were not told about commission arrangements and believe you were overcharged

Step 4: Wait for the Pause to Lift

Your lender will acknowledge your complaint but won't process it until after 31 May 2026. Once the pause lifts, they have 8 weeks to respond (or longer under the scheme rules).

Step 5: Escalate if Needed

If your lender rejects your claim or you're unhappy with the offer, you can escalate to the Financial Ombudsman Service for free.

Multiple Agreements = Multiple Claims

Had more than one car on finance? Each agreement is a separate claim. If you had three cars on PCP between 2010 and 2022, you could potentially claim £700+ for each one.

Key Dates

• Now: Submit your complaint directly to your lender (free)
• 31 May 2026: FCA complaint pause ends
• Mid-2026: FCA compensation scheme launches
• Late 2026: First scheme payments expected
• No deadline yet: But don't wait: the FOS reform may introduce time limits in future

Use our Car Finance Compensation Checker to see if you're eligible, and generate a complaint letter in minutes.