The Financial Conduct Authority (FCA) has confirmed one of the largest consumer compensation schemes in UK history. Around 12.1 million motor finance agreements taken out between 6 April 2007 and 1 November 2024 may be eligible, with total payouts estimated at £9.1 billion. The average compensation per agreement is expected to be approximately £829.
If you took out car finance at any point in that 17-year window, you may be entitled to redress — even if the agreement has ended, been settled early, or the vehicle is no longer in your possession.
Key dates for the scheme
| Date | What happens |
|---|---|
| 30 June 2026 | Scheme goes live for agreements taken out from 1 April 2014 onwards |
| 31 August 2026 | Scheme goes live for earlier agreements (April 2007 to March 2014) |
| Within 3 months of go-live | Lenders must tell customers whether they are owed compensation and how much |
| End of 2027 | Most claims expected to be settled |
Who may be eligible
The scheme covers the most common forms of motor finance, including Personal Contract Purchase (PCP) and Hire Purchase (HP). You may qualify if your agreement involved one of three commission arrangements that were not properly disclosed:
- Discretionary Commission Arrangements (DCAs) — where the dealer could adjust your interest rate to earn higher commission. These were banned by the FCA in 2021.
- High-commission deals — where commission made up at least 39% of the cost of credit and 10% of the loan amount.
- Tied lender arrangements — where a dealer implied they were searching for the best deal but had an undisclosed exclusive or preferred lender.
Who is unlikely to qualify
- Agreements with a 0% APR (considered fair by the FCA)
- Agreements where the commission was very small — under £120 before April 2014, or under £150 after
- Cases where commission was properly disclosed at the time
How much could you receive?
The FCA's average figure of around £829 masks wide variation. Most individual payouts will be in the hundreds of pounds. Around one in three payments will be capped. A small number of cases that closely align with the Supreme Court's Johnson judgment will receive full commission back plus interest.
Compensation is calculated using a standard formula with interest added at a minimum of 3% per year. For Scheme 1 cases (from April 2014), the FCA has set a 21% APR adjustment as the bounded regulatory mid-point.
Do you need to do anything now?
Lenders are expected to begin proactively contacting customers from 30 June 2026. However, contact details may be outdated for older agreements. You do not have to wait — you can complain directly to your lender now. If you have already complained, you do not need to do anything further; your case should be considered under the scheme.
Once a decision is issued, you have one month to accept or challenge the outcome. If you disagree, you can escalate to the Financial Ombudsman Service.
A warning on claims management companies
The Financial Conduct Authority and Which? have both warned consumers that claims management companies will aggressively market their services to people eligible under the scheme. You do not need to use a CMC or solicitor to make a complaint — the scheme is designed to be accessible directly. If you do use one, expect to pay a fee typically between 10% and 30% of any award.
Disclaimer
This article is for general information only and does not constitute legal or financial advice. Eligibility and compensation amounts depend on the specific terms of your finance agreement. Always read the FCA's official guidance and any correspondence from your lender carefully.
FAQ
Does the scheme cover all car finance?
It covers PCP, HP and similar dealer-arranged motor finance for cars, vans and motorbikes taken out between 6 April 2007 and 1 November 2024. Straightforward personal loans used to buy a car are not covered.
What if I have already paid off the finance?
You can still claim. What matters is the original agreement terms, not whether the vehicle is still yours.
Can I bring a case through the courts instead?
You can, but the FCA scheme is designed to be a quicker route. Complex or high-value cases may still warrant legal advice.
