Brumble Guides.
If you had car finance between 2007 and 2024, you could be owed compensation. The FCA confirmed the final rules of its redress scheme on 30 March 2026, covering 12.1 million agreements with an average payout of £829. Here's what happened, whether you're affected, and exactly what to do.
If you took out car finance between 2007 and 2024, you could be owed money. On 30 March 2026, the Financial Conduct Authority (FCA) confirmed the final rules of a compensation scheme covering 12.1 million car finance agreements. This is one of the largest consumer financial redress schemes the UK has ever seen.
This guide explains what happened, whether you are affected, how much you could receive, and what - if anything - you need to do.
The FCA confirmed the final car finance redress scheme on 30 March 2026. Here are the key numbers.
In This Guide
When you buy a car using finance, the deal is usually arranged through the car dealer. The dealer acts as a go-between - connecting you with a lender who provides the loan. What many people did not know is that the dealer was often paid a commission by the lender for arranging that deal.
On its own, receiving commission is not necessarily wrong. The problem was with how some of those commissions worked - and the fact that customers were not told about them.
The most harmful arrangement was called a discretionary commission arrangement (DCA). Under a DCA, the dealer could choose to increase the interest rate on your loan. The higher they set your rate, the more commission they earned. You were charged more for your finance - without being told that was happening, or why.
Imagine you go to a car dealer and agree to finance a car at 8% interest. You think that is the rate you qualify for. In reality, the lender offered the dealer a rate of 5% - but the dealer raised it to 8% to earn a bigger commission. You paid more than you needed to. That extra cost went to the dealer, not to cover any additional risk.
The FCA banned discretionary commission arrangements in January 2021, saying the practice was creating clear conflicts of interest. But the ban only stopped new arrangements - it left open the question of what should happen to the millions of agreements already in place before the ban.
Following a lengthy period of court cases and regulatory review, the FCA has now confirmed that customers who were affected by undisclosed or unfairly structured commission arrangements are entitled to compensation.
The FCA starts looking at how commission was being paid in the motor finance market, and whether it was leading to unfair outcomes for customers.
The FCA formally bans DCAs in motor finance, estimating the change would save customers £165 million a year. New finance agreements can no longer use this model - but the question of historical agreements remains unresolved.
The FCA announces a review of motor finance agreements made before the 2021 ban. It pauses the clock on complaints handling to give itself time to assess the scale of the issue.
The Court of Appeal rules that it was unlawful for car dealers to receive any commission on a finance deal without the customer's fully informed consent - not just DCAs. This significantly increases the number of people potentially affected.
The Supreme Court narrows the legal basis for claims, finding that car dealers do not owe customers a fiduciary duty. This is a legal win for lenders on the specific cases heard - but the FCA announces just two days later that it will proceed with a compensation scheme regardless.
The FCA sets out its proposed rules for a full industry-wide compensation scheme, covering agreements from 2007 to 2024. It consults with firms and consumer groups on how the scheme should work.
The FCA publishes the final rules for the motor finance redress scheme. 12.1 million agreements are confirmed as eligible, with an average payout of £829. Millions of consumers are expected to receive compensation in 2026, with the rest by the end of 2027.
The scheme covers a wide range of motor finance agreements. Here is a straightforward breakdown of who is and is not included.
There are three types of commission arrangement that can trigger a compensation payment:
| Type | What It Means |
|---|---|
| Discretionary Commission Arrangement (DCA) | The broker could increase your interest rate to earn more commission. This is the most straightforward case of unfairness. |
| High Commission Arrangement | Commission was at least 39% of the total cost of credit and 10% of the loan amount - regardless of whether the rate was discretionary. |
| Contractual Tie | The lender had an exclusivity or right-of-first-refusal agreement with the dealer, which was not disclosed to you - creating the false impression you were being offered a choice of lenders. |
If you cannot remember the details of a finance agreement from several years ago, a free credit report can help. Services like Equifax and TransUnion offer free credit checks that will show any credit agreements linked to your name, including historic car finance deals. This is a straightforward way to check before contacting a lender.
The FCA estimates the average payout will be around £829 per agreement. However, the exact amount you receive depends on the specific details of your agreement - including the size of the commission, the interest rate you were charged, and how long the agreement ran.
For most eligible agreements, the FCA is using a hybrid approach: you will receive the average of your estimated loss and the commission paid, plus interest at the Bank of England base rate plus 1% (with a minimum of 3% per year). For agreements before April 2014, the calculation reflects evidence that more harmful arrangements were more common in that earlier period, so payouts for older agreements tend to be higher on average.
A smaller group of consumers - those whose cases closely mirror the Supreme Court's Johnson ruling - will receive the full commission amount repaid plus interest. These cases involve an undisclosed contractual tie and/or a DCA where commission was at least 50% of the total cost of credit and 22.5% of the loan.
If you have more than one eligible agreement - for example, you financed a car in 2012 and again in 2019 - each agreement is assessed separately and you may receive compensation for both.
The most important thing to know is this: you do not need to use a claims management company (CMC) or a solicitor to access this scheme. The FCA has made the scheme free for consumers. Using a CMC or law firm could cost you around 30% of whatever compensation you receive - money that should stay in your pocket.
Look back through any paperwork you have for car finance taken out between April 2007 and November 2024. If you are unsure, use a free credit checking service like Equifax or TransUnion to see any credit agreements linked to your name.
Get in touch with the finance company that provided your loan - not the car dealer. Ask them to review your agreement under the FCA redress scheme. This is free. You can find the genuine contact details for your lender on the FCA's register at register.fca.org.uk.
If you have already complained, your lender must tell you whether you are owed compensation and how much by the end of 2026 (for agreements from April 2014) or by February 2027 (for older agreements). If you have not complained, lenders must contact you if they believe you are owed money.
People who have already submitted a complaint will be assessed and paid before those the lender proactively contacts. If you want to be in the earlier group, contact your lender now and put your complaint in writing. The deadline to complain and be in Scheme 2 (post-April 2014 agreements) is 30 June 2026. For Scheme 1 (pre-April 2014), the deadline is 31 August 2026.
If you are unhappy with your lender's response or the compensation offered, you can escalate to the Financial Ombudsman Service (FOS) free of charge. Anyone not contacted by their lender has until 31 August 2027 to make a claim.
The FCA has been clear: this scheme is free. If someone contacts you offering to handle your claim for a fee or a percentage of your payout, you should be cautious. You are entitled to the full amount of any compensation you are owed - without giving a cut to a third party.
High-profile compensation schemes attract fraudsters. The FCA has warned consumers to be alert to scammers who may contact them pretending to be their lender or a government body.
Genuine contact from your lender will not ask you to:
Before responding to any contact about a car finance claim, check the sender's details against the official contact information listed on the FCA's register. The FCA has also set up a dedicated motor finance scams helpline - details are available on the FCA's website at fca.org.uk.
If this situation has made you think more carefully about how car finance works, these Brumble guides may be useful:
You probably would not have known at the time - that was part of the problem. The FCA's view is that these arrangements were not properly disclosed to customers. Your lender is required to assess your agreement and tell you if you are eligible. If you want to check proactively, contact your lender and ask them to review your agreement under the FCA redress scheme.
Yes. The scheme covers agreements that were active between 6 April 2007 and 1 November 2024, regardless of whether they have since been settled or paid off. The fact that you no longer owe money on the agreement does not affect your eligibility for compensation.
No. The FCA has explicitly designed this scheme so that consumers can access it for free, without using a claims management company (CMC) or law firm. Using one could cost you around 30% of your payout. You can contact your lender directly, or escalate to the Financial Ombudsman Service if needed - both are free.
A free credit report can help. Services like Equifax and TransUnion will show credit agreements linked to your name, including historic motor finance. You can sign up for a free report at equifax.co.uk or transunion.co.uk. Once you have identified the lender, contact them directly.
The FCA expects millions of consumers to receive compensation in 2026, with the vast majority paid by the end of 2027. Consumers who have already complained are in the faster group and should hear from their lender sooner. Those who have not yet complained but are owed money will be contacted by their lender - but complaining now puts you in the earlier payment window.
Vans are included, as are motorbikes and campervans. The agreement must be a PCP or HP arrangement, taken out between 6 April 2007 and 1 November 2024, for personal use or business use as a sole trader (where the finance amount was under £25,000). Lease agreements are not covered.
The FCA has split the redress into two schemes to protect against potential legal challenges. Scheme 1 covers agreements from 6 April 2007 to 31 March 2014. Scheme 2 covers agreements from 1 April 2014 to 1 November 2024. If Scheme 1 is challenged legally, Scheme 2 can continue independently - so consumers with more recent agreements are protected either way.
You can refer your case to the Financial Ombudsman Service (FOS), which is free to use. The FOS will assess your case independently. You can also choose to pursue a legal claim through the courts, though this would typically involve legal costs and uncertainty about the outcome.
PCP and HP are the two most popular types of car finance in the UK. This guide explains how each one works, compares monthly payments and total costs with a worked example, and helps you decide which suits your budget and driving habits.
As a courier, it's important you have the right level of cover, read our comprehensive guide to ensure you don't get caught short.
Student car insurance is notoriously expensive, with the average UK student paying around £2,722 per year. This guide explains why premiums are so high for those in full-time education and what you can do to bring costs down legally.
