The FCA’s car finance compensation scheme is free. You don’t have to use a claims company or a solicitor. You can complain to your lender yourself, and lenders are expected to contact customers who may be owed money. A firm can help if you’d rather not deal with it, but they will charge a fee.
What happened
When you buy a car on finance through a dealer, the dealer is usually paid commission by the lender. Until January 2021 many lenders used “discretionary commission arrangements”, which let the dealer set your interest rate: the higher the rate, the more commission they earned. You usually weren’t told. The FCA banned these arrangements from 28 January 2021.
In August 2025 the Supreme Court ruled on three test cases. It found that in at least one case the relationship between the customer and the lender was unfair, because of how large the commission was and how it was hidden. Following that, the FCA designed an industry-wide scheme to compensate customers.
The FCA compensation scheme
- It covers PCP and hire purchase agreements taken out between 6 April 2007 and 1 November 2024 where the dealer was paid commission under a discretionary commission arrangement, a “high commission” arrangement, or a tied arrangement with the lender that wasn’t properly disclosed. Commission on its own doesn’t qualify.
- The FCA published its final rules in March 2026, in two parts: agreements from 2007 to March 2014, and from April 2014 to November 2024.
- The FCA estimated the average payment at around £829 per agreement. Some people will get more, some less, and some nothing.
- In 2026 three lenders and a consumer group challenged the scheme at the Upper Tribunal. While the challenges are heard, lenders don’t have to work out or pay compensation, so payments are unlikely before 2027.
Things are still moving, so for the latest position see the FCA’s car finance pages.
Who can help
If you’d like a firm to handle your claim, for example because you had several agreements or your lender has rejected you, we work with Consultation Claims Ltd, a claims management company authorised and regulated by the FCA (FRN 836626). They’ll explain how they work and what they charge before you agree to anything. We may be paid by them if you go ahead.
If you’ve already signed up with a claims company or solicitor for the same agreement, you don’t need to do it again.
Questions people ask
Do I need a claims company to get car finance compensation?
No. The FCA scheme is free to use. You can complain to your lender yourself. Lenders are expected to contact people who may be owed money.
What if I don’t have my paperwork?
That’s fine. Your lender holds the records. You just need to remember roughly when you had the finance and who it was with. It’s often on old bank statements.
Does it matter if the car was new or used?
No. What matters is how the dealer or broker was paid commission, and whether it was disclosed.
What about leases (PCH)?
Personal contract hire is a lease rather than a purchase and isn’t covered by the FCA scheme. Tell us anyway when you do your check.
Will it affect my credit score?
No. Complaining, or using the scheme, doesn’t affect your credit file.