Mis-sold car finance – who will get compensation and how will it be paid?

• Not all undisclosed commissions were unlawful – but if you feel your agreement was unfair, you can still complain. 
• The FCA says if you were not told about commission or think you paid too much, you should complain nowOpens in a new window
• If you’ve already complained about a discretionary commission arrangement (DCA), the FCA has step-by-step information on what to do nextOpens in a new window
• The FCA has announced it will consult on a compensation scheme. This will cover agreements with a DCA, and potentially some non-DCA cases.
• If you had a DCA, the FCA’s proposed scheme could mean you receive compensation next year – even if you haven’t complained. 
• If your provider told you your loan didn’t include a DCA but you’re concerned about another type of commission, you can make a new complaint to your providerOpens in a new window
• You don’t need to use a claims management company to get your money.
• Learn more about complaining if your agreement had a DCA, and complaining if your agreement had undisclosed commission.

Claiming compensation you’re owed won’t cost you anything if you do it yourself. 

You might have seen adverts for companies who can claim compensation on your behalf. These companies normally take a large cut of any compensation – up to 30%.    

A claims management company won’t be quicker or do anything you can’t do yourself – and avoiding them might save you £100s.  

The Supreme Court have ruled that hidden commissions, which were included in almost all finance agreements, weren’t unlawful.

However, the Supreme Court did uphold one complaint about a car finance deal that included an extremely high commission charge that was not disclosed. 

Customers with agreements that only had undisclosed commissions won’t receive compensation automatically. But if you are concerned you were not told about commission and think you may have paid too much for the finance, you should complain nowOpens in a new window

The FCA is consulting on introducing a compensation scheme for DCAs and aims to finalise the rules quickly so customers could start to get compensation next year. You can view information about the possible compensation scheme on the FCA.  

It’s likely any compensation for DCAs will be paid through a compensation scheme, meaning that you might not need to submit a complaint to get the money owed to you.    

You are due compensation if: 

• you took out motor finance before 28 January 2021 (including cars, vans, campervans and motorbikes)  
• your agreement was either a Personal Contract Purchase (PCP) or Hire Purchase (HP)  
• your vehicle was bought for personal use   
• your agreement included a DCA and you weren't clearly told about it.

DCAs were a hidden type of commission that allowed dealers and brokers to increase the commission they earned by charging customers more. 

The arrangement meant that a broker could set a higher interest rate on an agreement, meaning they would earn more in commission. 

DCAs were outlawed in January 2021. So, no car finance agreements made since then will include a DCA.

The best way to find out is to check through your car finance paperwork, if you still have it. If this isn’t possible, you can ask your lender.  

Even if your lender won’t tell you, they’ll still need to pay you compensation if your agreement included a DCA.   

Some firms have claimed that they never used DCAs. You can see a list of companies not using DCAsOpens in a new window on MoneySavingExpert. 

Even though the court has decided that undisclosed commissions weren’t necessarily unlawful the FCA says you should still submit a complaintOpens in a new window

You may still get compensation if it’s decided that your agreement was unfair.

Learn more about how to submit a complaint about undisclosed commissions in a car finance agreement.

If you had a DCA and haven’t complained yet, you could wait for the proposed scheme. But you can complain now –  Moneysavingexpert has a free tool: Car finance FREE reclaim tool & guideOpens in a new window

Car finance compensation is a big news story – unfortunately, this opens the door for scammers to use it as a way to trick people into handing over money or personal information.  

Be extremely careful of any unexpected calls, messages or emails you receive claiming to be from car finance companies or the government. They might pretend you need to enter your bank details, personal information or credit card numbers to receive compensation – and then use this to steal your money or identity.  

The FCA hasn’t finalised how compensation could be paid yet, so anyone trying to gather your details so that they can pay you is not genuine. For now, you can safely ignore and report any messages of this kind.   

Learn more about what to watch out for in our guide Am I being scammed? How to tell if you’ve been targeted.

 The FCA will be publishing information about its consultation and what it means for customers.  See the latest information from the FCA about car finance complaintsOpens in a new window, or call them on 0800 111 6768Opens in a new window.