Millions of UK motorists who financed a car, van or motorbike between 6 April 2007 and 1 November 2024 could soon receive an average payout of around £830 as the Financial Conduct Authority (FCA) finalises a major industry-wide compensation scheme.
The regulator announced on Monday (30 March) that it is pressing ahead with the redress programme after refining the rules in response to feedback from consumers, firms, and industry bodies.
The changes mean fewer agreements qualify overall, but those that do are expected to receive higher average compensation, up from earlier estimates of around £700.
In total, the scheme is projected to return up to £7.5 billion to consumers if 75% of eligible people make a claim, putting billions back into household pockets at a time when many face pressure on living costs.
The compensation addresses widespread issues with motor finance deals, particularly Personal Contract Purchase (PCP) and Hire Purchase (HP) agreements. Many dealers and brokers operated under discretionary commission arrangements (DCAs), where they could increase the interest rate on a loan to earn a bigger commission from the lender, without clearly telling the customer.
Consumers were often unaware they could shop around for better rates, or that the dealer had a financial incentive to push a more expensive deal. The FCA also identified problems with high commission levels and “tied” arrangements where dealers worked exclusively with one lender.
These practices meant some drivers overpaid without realising it. The new scheme provides a structured, free way to put things right without consumers needing to go through the courts or the Financial Ombudsman Service in most cases.
Who is eligible?
Roughly 12.1 million motor finance agreements from the 17-year period are in scope, though not every one will qualify for compensation. Eligibility generally applies if the customer was not clearly informed about:
- The existence of a discretionary commission arrangement
- High commission levels
- Tied lending arrangements (with limited exceptions for manufacturer-linked franchised dealers)
Certain cases are excluded, such as very small commissions, interest-free deals, or situations where the lender can prove the customer suffered no loss. High-value loans above a certain threshold are also directed to the Ombudsman instead.
How much could you get
The average payout is now estimated at around £830 per agreement (some reports cite £829). This figure includes the commission paid plus an estimate of the consumer’s loss, plus interest.
- In cases with particularly high commissions combined with other unfair factors, consumers may receive the full commission amount.
- Payouts are capped in about one in three cases so that no one ends up better off than they would have been if treated fairly.
- Interest is calculated at the average Bank of England base rate plus 1%, with that 3% minimum floor.
Actual amounts will vary depending on the specific deal – some drivers may receive significantly more, others less.
How to claim your money
The process is designed to be straightforward and free:
- Complain directly to your lender (the finance company, not the dealer). You can do this even if your agreement has ended.
- Lenders must handle complaints under the FCA’s scheme rules.
- If you disagree with the outcome, you can refer the case to the Financial Ombudsman Service.
- Do not use claims management companies or solicitors unless absolutely necessary — they can charge 30% or more of your payout in fees. The FCA strongly advises going direct to avoid losing a large slice of your compensation.
The FCA has a dedicated page with complaint templates and guidance: fca.org.uk/consumers/car-finance-complaints.
Lenders have until mid-to-late 2026 to implement the scheme. They are expected to contact likely eligible customers who haven’t already complained, with most outreach completed by early 2027.
If you aren’t contacted, you can still make a claim until 31 August 2027.
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