If you used car finance in the UK, you may be entitled to car finance compensation if important information about commission arrangements was not properly disclosed when you took out your agreement.
The Financial Conduct Authority (FCA) has introduced a motor finance redress scheme covering eligible agreements made between 6 April 2007 and 1 November 2024. The scheme can cover certain Personal Contract Purchase (PCP) and Hire Purchase (HP) agreements involving cars, vans, motorbikes and campervans.
However, the scheme has faced a legal challenge. The FCA currently expects that, if the scheme is upheld and there is no successful appeal, compensation payments could begin in 2027.
This guide explains car finance compensation eligibility, the FCA car finance deadline, how to make a claim and what you could receive.
What Is the Car Finance Compensation Scheme?
The car finance compensation scheme is an FCA redress scheme designed to compensate consumers who were affected by certain unfair or undisclosed arrangements involving motor finance.
The FCA estimates that around 12.1 million agreements could be eligible, although eligibility depends on the individual agreement and the scheme rules.
The scheme focuses on situations where customers were not properly informed about arrangements between a finance lender and the broker or dealer.
These can include:
- Discretionary commission arrangements (DCAs)
- Certain high commission arrangements
- Certain contractual ties between lenders and brokers
A discretionary commission arrangement could allow a broker or dealer to influence the interest rate offered to the customer and receive more commission as a result.
Who Is Eligible for Car Finance Compensation?
You may have a car finance compensation claim if your finance agreement meets the FCA's criteria.
Generally, the scheme covers motor finance agreements taken out between 6 April 2007 and 1 November 2024. Eligible finance can include PCP and HP agreements used to purchase cars, vans, motorbikes and campervans.
You may be eligible if you were not properly told about a relevant commission arrangement or contractual tie.
Car Finance Compensation Eligibility Checklist
Your agreement may fall within the scheme if:
- You used PCP or HP finance to buy a qualifying motor vehicle.
- The agreement started between 6 April 2007 and 1 November 2024.
- A relevant commission arrangement or contractual tie applied.
- You were not properly informed about the arrangement.
- The agreement was for personal use, subject to the FCA's rules.
- You have not already accepted compensation for the same issue.
Not every car finance agreement qualifies. For example, Personal Contract Hire (PCH) leases are not included in the FCA's redress scheme. Certain high-value loans and some business agreements are also excluded.
If you are unsure whether your agreement qualifies, checking the finance records and obtaining legal advice can help clarify your position.
What Is the FCA Car Finance Deadline?
The FCA's current timetable is important because the scheme has been legally challenged.
For certain complaints, lenders have specific dates by which they should contact customers if they are not owed compensation. For agreements beginning on or after 1 April 2014, customers who complained by 30 June 2026 should generally hear from their lender by 18 November 2026.
For agreements beginning before 1 April 2014, customers who complained by 31 August 2026 should generally hear from their lender by 18 January 2027.
These dates should not be confused with a simple final deadline for every possible complaint.
If you complain after the relevant dates, the FCA says that where no compensation is due, the lender should normally respond within five months of receiving the complaint, subject to exceptions.
The FCA also states that parts of the redress scheme are currently suspended while the legal challenge is dealt with. The case is expected to be heard in either December 2026 or February 2027, and payments under the scheme are expected to begin in 2027 if the scheme is upheld and the judgment is not appealed.
How Do I Check If I Am Eligible for Car Finance Compensation?
If you are asking, "How do I check if I am eligible for car finance compensation?", start by finding the details of your finance agreement.
Look for:
- Your original finance agreement.
- Bank statements showing finance payments.
- Emails or letters from the finance provider.
- Documents from the dealership.
- Your credit report.
If you no longer have your paperwork, you can check old bank statements, contact the dealer or check your credit file. Credit reference agencies can also help identify older finance agreements.
You do not necessarily need to know whether a DCA or another relevant arrangement was used before making a complaint. Your lender can review the agreement and determine whether it falls within the scheme.
How Do I Claim Car Finance Compensation?
The process starts by contacting the finance lender.
Step 1: Find Your Finance Provider
Identify the lender that provided your PCP or HP agreement. Your lender may appear on your original paperwork, bank statements or credit report.
Step 2: Make a Complaint
You can complain directly to the lender. The FCA provides information about relevant lenders and complaint routes. You do not have to use a claims management company to make a complaint.
Step 3: Wait for the Lender's Response
The lender will review your agreement and determine whether compensation is payable. Because of the current legal challenge, the timing of compensation decisions and payments remains uncertain.
Step 4: Review the Offer
If you receive a compensation offer, check the details carefully. Under the FCA process, customers have one month to accept or challenge the lender's response.
If you remain unhappy with the decision, you may be able to take the complaint to the Financial Ombudsman Service.
How Much Could the Car Finance Compensation Payout Be?
There is no guaranteed amount for an individual car finance compensation payout. The Financial Conduct Authority (FCA) estimates that eligible consumers will receive an average of around £830 per eligible agreement. This is an estimate, not a guaranteed payment or an amount that every person is entitled to receive. Source: FCA – Car Finance Claims.
The amount you may receive depends on the circumstances of your finance agreement and the applicable compensation calculation under the FCA's rules. Some people may receive more than the estimated average, while others may receive less.
A car finance compensation calculator can provide an indication of a potential payout, but it cannot guarantee the amount you will receive. Your actual compensation, if you qualify, will depend on the assessment of your agreement by the lender in line with the applicable rules.
If you had more than one eligible car finance agreement, each agreement may need to be assessed separately. The estimated average of £830 per agreement should not be interpreted as a guaranteed payout for every agreement or consumer.
Do I Need a Claims Management Company or Solicitor?
You can make a complaint yourself for free. The FCA states that you do not need to use a claims management company (CMC) or law firm to participate in its scheme.
Some firms charge a percentage of the compensation received. The FCA warns that customers using a CMC or law firm could pay fees of up to 36%, including VAT, depending on the agreement.
However, some consumers may prefer professional assistance when their circumstances are complicated or when they need help understanding their legal options.
At Justizia Law, car finance claims can be assessed based on the circumstances of the agreement, including issues involving undisclosed commission and irresponsible lending. Justizia Law offers a free, confidential, no-obligation initial assessment through its car finance claims service.
Can I Still Claim If I No Longer Own the Car?
Yes, potentially.
Eligibility is generally linked to the finance agreement rather than whether you still own the vehicle. The FCA scheme can cover qualifying agreements even where the finance has already been paid off or the vehicle is no longer owned, subject to the scheme rules.
If you have the details of an old PCP or HP agreement, it can therefore be worth checking whether the agreement may qualify.
What If I Have Been Contacted About Car Finance Compensation?
Be careful with unexpected calls, emails and text messages about compensation.
MoneyHelper warns that scams may ask consumers to provide personal information, payment details or bank information.
The FCA also advises consumers to make sure they know who they are dealing with before providing banking information. You should never provide your PIN or password to someone claiming to arrange your compensation.
What If I Am Bankrupt or Have an IVA?
Different rules can apply if you are involved in insolvency proceedings.
For example, GOV.UK states that if a motor finance agreement was taken out before bankruptcy or discharge, a redress claim may belong to the Official Receiver, with compensation potentially going towards creditors.
People with an IVA should contact the relevant insolvency practitioner before making a claim.
If this applies to you, obtain appropriate advice before submitting a claim or instructing a claims management company.
Conclusion
The car finance compensation scheme could provide redress to eligible customers affected by certain undisclosed commission arrangements on motor finance agreements. If you had a qualifying PCP or Hire Purchase agreement, it may be worth checking your eligibility and gathering your finance records.
The FCA's current timetable means compensation payments are expected to begin in 2027, subject to the outcome of the ongoing legal process. As deadlines and scheme details can change, it is important to rely on the latest official information when making a car finance compensation claim.
If you are unsure whether you qualify or want help understanding your options, Justizia Law can review your circumstances and explain the next steps for your car finance claim.
Frequently Asked Questions About Car Finance Compensation
What is the car finance compensation scheme?
The car finance compensation scheme is an FCA redress scheme for eligible motor finance agreements where customers were affected by certain undisclosed commission arrangements. It covers qualifying agreements taken out between 6 April 2007 and 1 November 2024, subject to the scheme's eligibility rules.
How do I know if I am eligible for car finance compensation?
You may be eligible if you had a qualifying PCP or Hire Purchase agreement between 6 April 2007 and 1 November 2024 and were not properly informed about certain commission arrangements or contractual ties. The FCA estimates that around 12.1 million agreements could be eligible.
How do I claim car finance compensation?
You can start by contacting the finance lender that provided your agreement and making a complaint. You do not have to use a claims management company or solicitor to make a complaint. You should gather your finance agreement, lender details and any other relevant documents if available.
How do I check if I am eligible for car finance compensation?
Check whether you had PCP or Hire Purchase finance for a qualifying vehicle between 6 April 2007 and 1 November 2024. You can look for old finance agreements in your paperwork, bank statements or credit records. If you cannot find the details, you may be able to contact the relevant lender for further information.
How much could my car finance compensation payout be?
There is no fixed payout for every customer. The FCA currently estimates an average compensation payment of around £830 per eligible agreement, although individual amounts may be higher or lower depending on the agreement and the applicable redress calculation.
When is the car finance compensation payout date?
There is currently no single confirmed payout date for all customers. The FCA says that, if its redress scheme is upheld and the judgment is not appealed, payments are expected to begin in 2027. Parts of the scheme are currently suspended while legal challenges are considered.
What is the FCA car finance deadline?
The relevant FCA deadline depends on the circumstances of the complaint and the finance agreement. The FCA's current timetable includes different response dates for complaints relating to agreements from different periods. Because the scheme is subject to legal proceedings, consumers should check the latest FCA information rather than relying on an old deadline published elsewhere.
Can I claim compensation if I have already paid off my car finance?
Potentially, yes. Paying off a PCP or Hire Purchase agreement does not automatically prevent an agreement from being considered. Eligibility depends on whether the agreement meets the relevant FCA scheme requirements.
Do I need a solicitor to make a car finance compensation claim?
No. You can complain directly to your lender without using a solicitor or claims management company. The FCA and MoneyHelper both explain that consumers can pursue the complaint themselves.
What happens if I am bankrupt or have an IVA?
Different rules can apply. If a qualifying motor finance agreement was taken out before bankruptcy or discharge, the Official Receiver may be entitled to make the redress claim and receive the compensation for creditors. People with an IVA should contact their insolvency practitioner before making a claim.