The Financial Conduct Authority (FCA) is working on a redress scheme for drivers who were mis-sold car finance between April 2007 and November 2024.
The details of the scheme are expected to be announced early 2026 and will take effect later that year.
Check if you can claim car finance compensation with Locksley Law
Around 14 million agreements* are said to be affected, and the FCA estimates a total of £8 billion* will be given in compensation.
We explain three ways below how you may have been mis-sold car finance, and how to claim compensation.
1. You were charged hidden commissions
This is one of the most common ways car finance was mis-sold.
Before being banned in 2021, lenders would often receive commission for selling a finance plan for your vehicle.
This commission was funded by you, through an inflated interest rate on your borrowing. Drivers often weren’t made aware of these arrangements, and that they could have qualified for cheaper borrowing.
The practice was called Discretionary Commission Arrangements (DCA) – and it often affected those on Hire Purchase (HP) agreements and Personal Contract Purchase (PCP) plans.
2. Your commission was unfairly high
Disclosing the DCA is only one part of the car finance compensation scandal.
Some drivers were charged “unfairly high commission” – and it’s irrelevant if this was disclosed to you at the time of the agreement.
The FCA considers an agreement to have “unfairly high commission” if it was more than 35% of the total cost of borrowing and more than 10% of the loan’s value.
3. You had a contractual tie
When offering car finance, some dealerships had a contractual tie with a single lender – meaning they only offered plans from them.
This arrangement was never disclosed to the buyer, so some claim that this created a falsehood that the finance plan on offer was “whole of market”.
How can I submit my claim for compensation?
If you believe you’re entitled to compensation, then you can use the free checker to find out more.
The Locksley Law’s free agreement eligibility checker will identify what agreements you have with which lender.
From there, you can decide if you wish to carry with their services to claim what you were owed.
It works on a no-win, no-fee basis – which means you pay nothing unless your claim is successful. You have 14 days to cancel with the law firm once you sign, without any charge.
After the 14 days, the law firm may charge if you cancel your agreement with the law firm as per their contract.
Fees are between 18% to 36% of the value of your claims, inclusive of VAT on any successful claim.
Locksley Law is a trading style of RH Law Ltd, authorised by the SRA (No. 659355). You do not need to use a Law Firm; you can complain directly to your lender or to the Financial Ombudsman Service (FOS) for free or you can complain via the FCA proposed redress scheme.
*Average payout figure and further information as per FCA: https://www.fca.org.uk/news/press-releases/14m-unfair-motor-loans-compensation-proposed-scheme
