Car Finance Scandal: Are You Owed £700+ Compensation? Here's How to Claim

If you took out car finance between April 2007 and November 2024, you could be owed around £700 in compensation. The car finance scandal is one of the biggest consumer wins since PPI, with an estimated £8.2 billion to be paid out to around 14 million people.

What Is the Car Finance Scandal?

For years, car dealerships and finance brokers were allowed to set their own commission rates on car loans. This was called a "Discretionary Commission Arrangement" (DCA). The problem? The higher the interest rate they charged you, the more commission they earned.

This created a massive conflict of interest. Brokers were incentivised to put you on more expensive deals, and they didn't have to tell you about it.

The Numbers Are Staggering

• 14 million car finance agreements potentially affected
• £8.2 billion estimated total compensation
• £700 average payout per agreement
• Multiple claims possible if you had more than one finance deal

Are You Eligible to Claim?

You could be owed compensation if:

1. You had car finance between April 2007 and November 2024
2. It was PCP (Personal Contract Purchase) or HP (Hire Purchase)
3. The broker/dealer could set their own commission rate

What's NOT Covered

• Car leasing (PCH - Personal Contract Hire)
• Finance taken directly from a bank (not through a dealer)
• Agreements after November 2024 (rules changed by then)

You can still claim even if:

• You've paid off the finance
• You no longer own the car
• The car was repossessed
• The finance company has gone bust

How Much Could You Get?

The FCA has proposed average compensation of around £700 per agreement. But your actual amount depends on:

• How much you borrowed
• The interest rate you were charged
• How much hidden commission was added
• The length of your agreement

If you had multiple car finance deals over the years, you could claim for each one.

Step-by-Step: How to Claim (No Solicitor Needed)

Here's the important bit: you don't need a claims company or solicitor. You can do this yourself for free.

Step 1: Find Your Finance Agreement

Dig out your paperwork, or contact the finance company to request copies. You need:

• The lender's name
• Your agreement number
• The dates of the agreement
• The amount borrowed

Step 2: Check Your Eligibility

Your agreement likely had a DCA if:

• You got finance through a car dealership
• It was PCP or HP
• It was between April 2007 and November 2024

Step 3: Submit a Complaint to the Lender

Write to your finance company and say:

"I believe my car finance agreement [reference number] may have included a Discretionary Commission Arrangement. I was not informed about this, and I request compensation for any hidden commission that was added to my loan."

The FCA has a template letter on their website you can use.

Step 4: Wait for Their Response

The FCA has paused complaint handling until 31st May 2026 to set up a proper redress scheme. But submitting now:

• Timestamps your claim
• Puts you in the queue
• Protects your position

Step 5: If They Reject You

If the lender refuses your claim, you can:

• Escalate to the Financial Ombudsman (free)
• Wait for the FCA redress scheme
• Consider court action (though the scheme is likely easier)

Key Dates and Timeline

Here's what's happening:

Common Myths Debunked

Myth: "I need to use a claims company"

No. You can claim directly for free. Claims companies take 25-40% of your compensation.

Myth: "I can't claim because I don't have the paperwork"

The finance company must provide copies of your agreement on request.

Myth: "The car was years ago, so I can't claim"

You can claim for agreements going back to April 2007.

Myth: "I need to prove I was overcharged"

The burden is on the lender to show the commission was disclosed. If they can't, you're likely due compensation.

What About Claims Companies?

You've probably seen adverts from claims management companies. Here's what to know:

• They'll take 25-40% of your compensation
• They do the same thing you can do yourself
• The FCA scheme will be free to use
• You don't need legal expertise for this

Our advice: save your money and do it yourself.

What to Do Right Now

1. Find your old car finance documents or request copies
2. Submit a complaint to your lender to timestamp your claim
3. Don't sign up with a claims company until you've tried yourself
4. Wait for the FCA scheme which should be simpler and free

The compensation is coming. Make sure you're in line to get yours.