If you took out car finance between April 2007 and November 2024, there is a strong chance you were overcharged without being told. The FCA is launching a compensation scheme that could pay average awards of £700 per agreement — and many customers will receive significantly more. Find out in minutes whether you qualify.
Millions of UK drivers took out Personal Contract Purchase (PCP) or Hire Purchase (HP) agreements without ever being told that their car dealer was earning a hidden commission on the deal. That commission was often paid by the lender and, in many cases, it was directly tied to the interest rate you paid: the higher the rate, the more the dealer earned. You were not told, and you could not negotiate.
This practice — known as a discretionary commission arrangement (DCA) — was banned by the Financial Conduct Authority (FCA) in January 2021. But it operated unchecked for years before that ban, affecting an estimated 40% of all car finance agreements. In January 2024, the FCA launched a formal investigation into the scale of the problem. What followed was one of the most significant consumer financial redress stories in UK history.
In October 2024, the Court of Appeal ruled that it was unlawful for car finance companies to pay undisclosed commissions to dealers. In August 2025, the Supreme Court confirmed that this could be unfair and unlawful depending on the circumstances. The FCA is now finalising a formal compensation scheme, expected to launch at the end of March 2026.
If you are eligible, you do not need to use a claims management company. You can use a specialist service like PCP Missold to handle your claim on a no-win no-fee basis — ensuring you keep the maximum amount of any compensation you receive.
What Is Car Finance Mis-Selling?
Car finance mis-selling occurs when a customer is not given the information they need to make a properly informed decision about their finance agreement. In the context of the current FCA investigation, the most significant form of mis-selling involves hidden commission payments.
When you financed a car through a dealership, the dealer or broker arranging the loan was almost certainly paid a commission by the lender. In many cases, that commission was discretionary: the dealer could choose from a range of interest rates, and a higher rate meant a higher commission for them. The conflict of interest was clear — but customers were rarely told about it.
Even where commission was fixed rather than discretionary, the Court of Appeal ruled in October 2024 that customers must have given their fully informed consent to any commission arrangement. In most cases, they had not. This widened the scope of potential claims considerably.
How Hidden Commission Worked in Practice
Here is a simplified example. You walk into a dealership and agree to finance a car over 48 months. The lender has a rate range of 5% to 12% APR. The dealer could offer you 6%, but instead offers you 10%, because the higher rate earns them an additional £500 in commission. You accept, because you trust the dealer is giving you a fair deal and you have no idea the commission arrangement even exists.
Over the course of a four-year agreement, that difference in interest could cost you hundreds or even thousands of pounds. You paid more than you needed to, without your knowledge, so that someone else could earn more.
This is what the FCA found to have happened on a widespread, systemic basis across the motor finance industry.
Understand how this worked in full detail on our page about hidden commission in car finance.
Are You Eligible to Make a Mis-Sold Car Finance Claim?
You may be eligible to claim compensation if all of the following apply:
- You financed a car, van, motorbike or other motor vehicle in the UK.
- The finance was on a PCP (Personal Contract Purchase) or HP (Hire Purchase) agreement — not a lease.
- The agreement was taken out between 6 April 2007 and 1 November 2024.
- The finance was arranged through a dealer or broker rather than directly with a lender.
- You were not told about the commission arrangement between the dealer and the lender.
You do not need to know the specific interest rate you were charged or have access to your original finance documents in order to start a claim. PCP Missold can help you locate old agreements and establish whether a commission arrangement was in place.
It is worth noting that not everyone will receive compensation. The FCA's redress scheme will assess each agreement individually. However, the evidence gathered during the investigation suggests the majority of claims from this period will be found to have involved undisclosed commission.
How Much Compensation Could You Receive?
The FCA has estimated that eligible customers can expect to receive an average of £700 per finance agreement. That figure includes interest calculated from the date of overpayment to the date compensation is paid. However, the average masks a wide range: some customers will receive less, and many will receive significantly more.
The amount you receive depends on several factors: the size of the original loan, the interest rate differential between what you were charged and what a fair rate would have been, the length of the agreement, and the type of commission arrangement involved.
If you had multiple car finance agreements during the eligible period — which is common — you may be entitled to separate compensation for each one.
Want to estimate your payout? Use our car finance compensation calculator to get an indicative figure.
How the FCA Redress Scheme Works
The FCA is launching a formal, industry-wide redress scheme that will require lenders to proactively identify affected customers and contact them directly. You should not need to chase your lender if the scheme is in place — they will be required to write to you.
However, the FCA has confirmed that customers who have already submitted a formal complaint will be prioritised in the process. If you have not yet submitted a complaint, doing so now places you ahead of those who wait for lenders to contact them.
The scheme is expected to launch at the end of March 2026. Lenders will then have an implementation period of three to five months to prepare, after which they must assess claims and provide redress offers within three months. If you receive an offer you can accept it immediately.
Find out everything about the scheme timeline on our dedicated Motor Finance Redress Scheme page.
Do You Need a Claims Management Company?
No. The FCA has been explicit that you do not need to use a claims management company (CMC) or a law firm to access compensation through the redress scheme. You can submit a complaint directly to your lender at no cost. The FCA has also launched a public awareness campaign to make this clear.
However, the claims process can be complex — particularly if you have multiple agreements, if the original lender has changed ownership, or if you do not have access to your original documents. Many customers find value in having a specialist service manage the process on their behalf.
If you do choose to use a claims service, the FCA warns that some CMCs charge up to 30% of any compensation received. PCP Missold operates on a no-win no-fee basis with a capped fee that is clearly explained before you proceed, meaning you keep the majority of your compensation.
Why Act Now?
The FCA redress scheme is launching imminently. Customers who have already submitted complaints will be processed first. The longer you wait, the further back in the queue you sit.
There is also an important practical reason to act quickly: gathering the evidence needed to support your claim takes time. Older finance agreements may require data access requests to lenders, and this process can take weeks. Starting now means your claim is as well-evidenced as possible when the scheme opens.
PCP Missold has been handling car finance mis-selling claims since the FCA investigation began. Our team knows exactly what information is needed and how to obtain it.
Understanding the FCA Investigation
The FCA launched its investigation in January 2024 following a Financial Ombudsman Service ruling against Barclays. What began as a probe into discretionary commission arrangements grew significantly after the Court of Appeal ruling in October 2024, which found that even fixed commission arrangements could be unlawful if customers were not fully informed.
The Supreme Court partially upheld this ruling in August 2025, and the FCA has since been designing a redress scheme capable of handling the scale of the problem — an estimated 14 million agreements across the eligible period.
Read the full history of the investigation on our FCA Car Finance Investigation page.
