Updated: 05 November 2025

Originally Published: 31 May 2025

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Introduction: Why 2025 Is A Turning Point

If you financed a car between 6 April 2007 and 1 November 2024, your agreement may deserve a second look. Millions of UK drivers took out PCP and HP deals that felt simple in the showroom, yet many later discovered hidden costs or conflicts they were never told about. In August 2025 the Supreme Court clarified that commissions are not unlawful by default, but poor disclosure or excessive commission can still create an unfair relationship under the Consumer Credit Act [1]. At the same time, the Financial Conduct Authority (FCA) kept its pause on final responses for commission cases until 4 December 2025 [2] so it can finish a single, national redress framework.

Two numbers matter for planning. The FCA’s latest modelling suggests a typical payment of about £700 per eligible agreement, and a potential industry total of up to £8.2 billion once the scheme is live[3] . Nothing is guaranteed, but these figures give a useful sense of scale.

This guide explains what is mis-sold car finance, how to claim mis-sold car finance, who is likely to qualify, and how finance claims experts or a PCP claims company can help if you prefer support. Wherever you are starting from, you will find clear steps, practical checklists, and links to deeper guides that sit alongside this in-depth page.

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What This Guide Covers

• What is mis-sold car finance
• The FCA’s three types of unfair car finance agreements
• Signs your PCP or HP agreement was mis-sold
• How mis-sold car finance affects your credit score
• What discretionary commissions are and why they matter
• The 2025 to 2026 timetable for complaints and redress
• How to claim mis-sold car finance with or without help
• Where PCP claims fit in and when a PCP claims company makes sense

What Is Mis-Sold Car Finance?

Mis-sold car finance is any car loan that was not explained fairly or clearly, or where hidden incentives shaped your cost without proper disclosure. The most common agreements are PCP and HP. From 2007 to 2024, these products became the default way to buy a car. Dealers and brokers were often paid by lenders, but customers were rarely told enough about those payments to make an informed choice.

If you are asking what is mis-sold car finance, think about three questions. Were the key costs explained in a way you understood, including the APR, term, fees, mileage limits and any balloon payment? Were you told that a commission existed and how it might affect your interest rate? Were you offered a genuine choice of lenders rather than a single option dressed up as a take it or leave it deal?

Want a quick red flag checklist. Read our detailed guide: How Do I Know If I Was Mis-Sold Car Finance?

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The FCA’s Three Types Of Unfair Car Finance Agreements

The FCA’s consultation sets out three categories that will guide how mis-sold car finance claims are assessed for agreements between 6 April 2007 and 1 November 2024.

1. Discretionary Commission Arrangements

A discretionary commission arrangement, often shortened to DCA, allowed a dealer to set or influence your rate within a band. The higher the rate, the larger the commission they earned. Most customers were never told that the dealer had this power. DCAs were banned for new loans in January 2021, but older agreements remain in scope for redress.

For a deeper look at why DCAs create long term harm, see: The Long-Term Implications Of Discretionary Commissions On Consumers

2. High Commissions

Even when paperwork said a commission may be paid, the amount was usually hidden. The FCA flags very high commissions using two yardsticks. Around 35 percent or more of the total cost of credit, or 10 percent or more of the amount borrowed. Commissions at these levels can distort the sale because the seller earns far more when the customer pays more.

3. Restricted Lender Access

In many showrooms the finance menu was not a menu at all. It was one provider only, often the manufacturer’s own lender. If you were steered into a single product without a real comparison, that restriction may have stopped you finding a better rate elsewhere.

If your contract fits one or more of these categories, you are squarely within the FCA’s focus and can claim mis-sold car finance once the scheme starts.

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How Car Finance Mis-Selling Typically Happened

Here are the patterns we see again and again in mis-sold car finance claims.

No real disclosure of commission. You were not told that the dealemis-sold car financer could earn more by setting a higher rate.

Unusual APR for your profile. Your rate felt high for your credit score and there was no sensible explanation.

Only one lender. You were given a single option rather than a genuine comparison.

Pressure to sign now. You were told the car or the rate would be gone if you took time to think.

PCP terms not clear. Balloon payments, mileage caps, or excess wear charges were glossed over.

If two or more of these ring true, your file is worth checking carefully.

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How Mis-Sold Car Finance Affects Your Credit Score

The harm is not just the extra interest you paid. Poorly explained finance often triggers late payments, persistent arrears, defaults, or even repossession. These marks can sit on your credit file for up to six years and can make everyday borrowing more costly.

If your complaint is upheld, unfair markers linked to the agreement can be repaired or removed. You will find a plain English walkthrough in our explainer: How Mis-Sold Car Finance Agreements Affect Borrowers’ Credit Score

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What Discretionary Commissions Are And Why They Matter

A DCA created a direct conflict. The dealership could increase your rate and earn more. You were not told that their income rose when your payment rose. The FCA banned DCAs in 2021 [4] because that conflict could not be managed fairly, and older agreements that used DCAs now sit at the heart of the consultation.

To understand the longer tail of DCA harm, read the deep dive linked above. The short version is simple. DCA incentives raised rates for many drivers who thought they were getting a rate set only by the lender. That is the essence of mis-sold car finance during this period.

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The Timetable For 2025 And 2026

Here is the roadmap so you can plan without guesswork.

August 2025: Supreme Court confirms that non-disclosure and excessive commission can make an agreement unfair.

October to November 2025: FCA consultation on a national redress process for contracts between 2007 and 2024 [5].

4 December 2025: FCA pause on final responses ends. Lenders prepare to apply the rules.

Early 2026: Final FCA rules expected.

31 July 2026: Proposed deadline for lenders to issue final responses.

Late 2026: First compensation payments expected under the framework.

Submitting your complaint now still helps. Your lender must log it and it will be ready for assessment when the pause ends.

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Who Is Eligible To Claim

You are likely to be eligible if you meet these points.

• You took out PCP, HP, or a similar regulated car finance product between 6 April 2007 and 1 November 2024.
• Commission was not properly explained or the rate was influenced by a DCA.
• Your APR was higher than expected for your credit score and no clear reason was given.
• You were offered only one lender or not given time to compare.
• Key PCP terms such as balloon payment or mileage limits were not made clear.
• You do not need to still own the car. You do not need to have an active agreement. You can still bring PCP claims or HP complaints for settled loans if they fall in the covered dates.

How Much You Could Recover

The numbers will vary from case to case, but the FCA’s latest modelling gives a reasonable benchmark.

Average per agreement: about £700

Estimated industry total: up to £8.2 billion depending on uptake

A typical payout may include four elements.

• Refund of overpaid interest where a DCA or hidden commission raised your rate.
• Repayment of undisclosed commission paid to a broker or dealer.
• Simple interest on the redress amount, usually Bank of England base rate plus one percent.
• Credit file corrections where unfair markers were linked to the mis-sold agreement.

In some cases you may also see a small award for distress or inconvenience where conduct was especially poor.

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How To Claim Mis-Sold Car Finance

You can go direct to your lender or use professional help. Either route can work. Choose the path that fits your time, paperwork, and comfort level.

Option 1: Claim Directly With Your Lender

Compose a brief, factual grievance. Include your name, address, phone number, and agreement number. State the facts that were not right and what you want. For instance:

I was not told that my dealer could adjust my interest rate to earn a commission. I believe this increased my costs. Please confirm whether a commission was paid, how my rate was set, and refund any overpaid amounts with interest. Please also correct any unfair credit entries linked to this account.

Pros: Free, full control.

Cons: You manage the timeline and follow ups.

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Option 2: Use Finance Claims Experts Or A PCP Claims Company

A PCP claims company or finance claims experts can gather evidence, request missing documents, draft your complaint, and manage all correspondence. Most work on a no win no fee basis. Typical fees range from 18 to 36 percent including VAT of any successful redress. Always check FCA authorisation and get the fee terms in writing.

Pros: Less admin, useful for complex files or multiple agreements.

Cons: A success fee applies if you win.

For timelines and what to expect, see the companion explainer: How Long Does A Mis-Sold Car Finance Claim Typically Take?

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Documents That Help Your Case

Do not let missing paperwork stop you. Send what you have, then request the rest.

• Finance agreement and pre-contract information
• Dealer quotes or finance illustrations
• Emails, letters, or text messages about the sale
• Monthly statements or a settlement figure
• Short notes of conversations, with dates if you have them
• Bank statements that show repayments

Lenders must retain records. A good representative can also request them for you.

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Worked Examples To Sense Check Your Position

Example 1: DCA Uplift On A Mid Range PCP

You borrowed £10,000 over four years. A fair APR might have been 6 percent. Your contract shows an APR near 10 percent. The FCA’s testing suggests a common DCA model can add around £1,100 in extra interest on a £10,000 four year loan. That uplift points to potential redress if your file shows a DCA or poor commission disclosure.

Example 2: High Commission With Thin Disclosure

Your paperwork says a commission may be paid, but does not state an amount or how it affects price. Later you learn the broker received a four figure payment. If that payment equates to 10 percent or more of the amount borrowed or 35 percent or more of the cost of credit, your case may land in the high commission category.

Example 3: Restricted Access In The Showroom

You were offered one lender only, told it was the dealership standard. You were not shown a comparison and later discovered cheaper options existed. That restriction can be unfair even without DCA evidence.

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Why Acting Now Still Matters

Even with the pause, early action has three benefits.

• You secure your place in the queue. Your complaint is logged and time stamped.
• You reduce the risk of a later deadline. If the FCA sets a final submission date, you will already be inside.
• You are ready for fast processing. When the rules land in early 2026, your file will not be starting from zero.

Frequently Asked Questions

Can I claim if my finance has ended?

Yes. You can claim mis-sold car finance even if the vehicle has been sold or the loan is fully repaid, provided the agreement falls within the coverage period.

Does complaining hurt my credit score?

No. Making a complaint does not lower your score. If you win, unfair markers can be corrected or removed.

Do I need a solicitor or can I use a PCP claims company?

You can do this yourself, hire a solicitor, or appoint a PCP claims company. A solicitor may be right for complex disputes. A claims company suits volume casework. Either way, ensure the provider is regulated and clear on fees.

What if the dealer closed or the lender rebranded?

Your claim usually sits with the lender or its legal successor. The FCA scheme is being designed to cope with changes of name or ownership.

How long will it take?

The pause runs until 4 December 2025. 31 July 2026 is the proposed deadline for lender responses. Payments are expected later in 2026. For a realistic timeline, read the companion guide mentioned above.

Is there a calculator for PCP claims?

Online tools can give a rough estimate, but the final figure will depend on your documents, the agreed methodology, and the FCA rules once published.

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Key Facts At A Glance

Coverage Period: 6 April 2007 to 1 November 2024

Products Covered: PCP, HP, and other regulated car finance

Unfair Categories: DCAs, high commissions, restricted lender access

Average Compensation: About £700 per eligible agreement

Estimated Total Redress: Up to £8.2 billion across the market

Complaint Pause Ends: 4 December 2025

Final Rules Expected: Early 2026

Lender Response Deadline: 31 July 2026

First Payments: Late 2026

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Conclusion: Protecting Your Rights In 2025

The UK is moving toward a single, consistent solution for mis-sold car finance claims. The Supreme Court has made transparency the standard. The FCA has banned the worst commission model and is finalising a national approach to redress. If your agreement sits between 2007 and 2024, now is the moment to gather your documents, write a short factual complaint, and get into the queue.

You can claim mis-sold car finance on your own, or you can ask finance claims experts or a PCP claims company to handle the heavy lifting. Either route can work. What matters is that you start. A fair outcome could return money you should never have paid and clean up unfair credit entries, while pushing the industry toward clearer, more honest selling for every driver.

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References:

1. In August 2025 the Supreme Court clarified that commissions are not unlawful by default, but poor disclosure or excessive commission can still create an unfair relationship under the Consumer Credit Act - https://supremecourt.uk/uploads/uksc_2024_0157_0158_0159_judgment_2bb00f4f49.pdf
2. the Financial Conduct Authority (FCA) kept its pause on final responses for commission cases until 4 December 2025 - https://www.fca.org.uk/publication/consultation/cp24-15.pdf
3. The FCA’s latest modelling suggests a typical payment of about £700 per eligible agreement, and a potential industry total of up to £8.2 billion once the scheme is live - https://www.fca.org.uk/news/press-releases/14m-unfair-motor-loans-compensation-proposed-scheme
4. The FCA banned DCAs in 2021 - https://www.fca.org.uk/publications/policy-statements/ps20-8-motor-finance-discretionary-commission-models-and-consumer-credit-commission-disclosure
5. October to November 2025: FCA consultation on a national redress process for contracts between 2007 and 2024 - https://www.fca.org.uk/news/statements/fca-consults-motor-finance-compensation-scheme