How to claim compensation for mis-sold car finance

Following a Supreme Court decision in August 2025, the FCA has announced a proposed compensation scheme for people affected by mis-sold car finance. 

Under the scheme, the FCA estimates that anyone eligible for compensation will receive an average payout of £700 per agreement. Payments are likely to begin in mid-2026. 

The FCA has said that customers who submit a complaint before the scheme begins are likely to get their compensation faster. You can check the latest information about car finance claimsOpens in a new window on the FCA website.  

You won’t have to make a complaint to get compensation, as under the FCA’s proposed scheme companies will need to contact affected customers asking them if they want to opt in. 

But if you do complain before the scheme starts, your claim will be handled faster and you could get compensation up to three months earlier than if you wait. It also ensures your lender has your most up-to-date contact details. 

So, while you won’t miss out if you wait to be contacted, complaining is likely to be the quickest way to get your compensation.

Based on the FCA’s proposed compensation scheme, you’re likely to get a payout if your car finance agreement included any of the following, and you weren’t properly told about it: 

• a discretionary commission arrangement (DCA)
• unfairly high commission 
• a contractual tie. 

Your motor finance deal also needs to have been: 

• agreed between 6 April 2007 and 1 November 2024 
• either a Personal Contract Purchase (PCP) or a Hire Purchase (HP). 

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

The best way to find out if your agreement had a DCA 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. 

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

You will be eligible for compensation if your agreement included commission that was over:  

• 35% of the total cost of credit, and  
• 10% of the overall loan.  

However, many agreements won’t have made these figures clear. 

Some motor finance agreements were mis-sold because a contractual tie existed. This means that the dealer had an agreement with a lender to only offer you their finance option rather than searching the market for a better deal.   

If you weren’t told about a contractual tie, find out if you’ll be eligible for compensation.

The FCA estimate that customers will receive an average of £700 per mis-sold car finance agreement.

Avoiding a claims management company or law firm will ensure that you receive the full amount of money that you’re owed. 

If you’re not sure who provided your car finance agreement, you can:  

• check previous bank statements  
• look for confirmation emails or letters   
• contact the dealer where you got the car.   

If your agreement was active in the last six years, you can also check your credit report. Your provider should be listed in there.   

You can then provide this information to your lender as evidence you had an agreement. 

Gather any information about your car finance.  Then complain to your lender, ideally in writing. 

You’ll need to complain to the firm you were paying each month. If you’re not sure who that is, you can check your credit report (if the agreement was active in the past six years) or old bank statements if you have them.

Tell the lender you think you’ve been mis-sold car finance and include as much information as you have. 

If you’re thinking of complaining, it’s a good idea to use a free template letter so that you can be sure you’ve included everything you need to.  

You should get a response from the lender to confirm that they’ve received your complaint within eight weeks. If you don’t hear anything, contact the firm again to check if they received it.

Ideally, your lender will then respond to let you know if you're eligible for compensation. However, the FCA has given firms extra time to respond to complaints, so you might not hear back until the scheme starts, which is likely to be in early 2026.

You can get step-by-step information about when you can expect a responseOpens in a new window on the FCA website. 

Once your complaint has been logged, you won’t need to do anything more for now. You’ll be contacted by your lender once the compensation scheme begins. 

The FCA is currently consulting on the proposed compensation scheme. They’re expecting the scheme to begin in early 2026.

The scheme hasn’t been confirmed yet, so some of these timings could change. 

Once the scheme starts, your lender will invite you to join within:  

• three months if you’ve already complained – they’ll ask if you want to opt out of the scheme 
• six months if you haven’t complained – they’ll ask if you want to opt in.  

Once you’ve joined the scheme: 

• your lender will confirm if you’re owed compensation, along with how much you’ll get, within three months  
• you’ll be paid the amount you’re owed within the next one month.    

It’s possible that some lenders won’t have contact details for affected customers. In this case, you’ll need to reach out to them and look to make a claim.   

You’ll have a year from when the scheme starts to contact your lender. So, if you aren’t sure if your lender has your details, it’s a good idea to get in touch with them and submit a complaint.

If you already had a complaint rejected but you still believe you’re eligible, you can submit another complaint.  

If you decide not to complain again, your lender will still need to contact you if they find that you’re eligible for compensation. If this happens, they’ll ask if you want to opt in for a payout.  

Some people have been contacted by fraudsters pretending to be from car finance lenders. They will offer fake compensation as a way to trick people into giving their personal details. 

The compensation scheme hasn’t begun yet, so anyone contacting you to offer a payout is a scammer. 

To learn more about what to watch out for, view our guide Am I being scammed? How to tell if you’ve been targeted.