How a decade of hidden commissions grew into one of the UK’s biggest consumer finance investigations, and what drivers should expect next.

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Overview

The car finance scandal has evolved from a niche industry concern into a national moment of accountability. What began as everyday dealership practice has led to a market-wide investigation involving the Financial Conduct Authority (FCA), the Supreme Court, and a potential compensation bill running to billions of pounds.

Between 2007 and 2024, millions of drivers entered agreements that looked affordable on the surface but carried hidden costs in the background. Many were mis-sold car finance through commission structures and rate-setting practices that pushed up the price without clear disclosure. As awareness has grown, so has the number of car finance claims and PCP claims, with drivers trying to recover overpaid interest and unfair charges.

This guide walks through the full story. We start with the rise of Discretionary Commission Arrangements (DCAs), move through early warnings and regulatory scrutiny, and finish with the FCA’s intervention and the extended consultation deadline of 12 December 2025 [1]. Along the way, you will see how the pieces fit together and what it means for your own situation, including realistic expectations for how long do car finance claims take and when will PCP claims be settled.

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2007–2010: PCP takes off and commissions move behind the curtain

The late 2000s brought a new normal for buying cars. Personal Contract Purchase (PCP) and Hire Purchase (HP) made newer models feel reachable. The pitch was simple. Low monthly payments, a clear end option, and the flexibility to move into another vehicle.

What most customers did not see was the commercial engine underneath. Dealerships and brokers often received commission from lenders. In many cases, sales staff could adjust the interest rate within a range. The higher the rate, the bigger the commission. This created a tension between customer value and salesperson incentive. Few customers were told that their rate could be influenced in this way.

The ground was set for problems later. Buyers believed they were being priced on creditworthiness alone. In reality, pricing could rise because it made the transaction more profitable for the person selling the finance.

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2010–2016: Discretionary Commission Arrangements become standard practice

By the early 2010s, DCAs were deeply embedded across the industry. The design was simple. Lenders gave dealers a rate band. Dealers chose the customer’s rate inside that band. The commission the dealer earned rose with the rate the customer paid.

There was no single headline moment in this period. Instead there was a slow accumulation of quiet concerns. Customers compared notes and found different rates for similar credit profiles. Independent writers and consumer forums began to ask why. A handful of car finance claims surfaced, but without a formal stance from the regulator, most did not go far.

This was the quiet build-up stage of the car finance scandal. The pattern existed. The scale was not yet visible.

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2017–2020: Pressure builds and the FCA steps in to investigate

By the late 2010s, the questions were harder to ignore. Why did two buyers with similar credit scores get such different rates at different dealerships? Why were some rates much higher than expected, even for prime borrowers?

The FCA launched an investigation into commission models and the relationship between dealers and lenders. The evidence suggested what many suspected. Discretionary rate-setting, combined with commission that rose with the customer’s rate, created a conflict of interest that could lead to higher costs.

The message was clear. Pricing had to be fair, consistent and explainable. The industry needed a course correction.

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January 2021: The FCA bans DCAs for new agreements

On 28 January 2021, the FCA banned discretionary commission arrangements for new motor finance [2]. The regulator concluded that this model could not be squared with fair treatment.

The ban stopped the practice in real time, but it did not help those who had already taken out finance. Millions of PCP and HP agreements written between 2007 and 2021 remained in place. Many involved commission that had not been explained in plain terms. A second phase began as customers started to question historical deals and file car finance claims for refunds.

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2022–2023: Complaints surge and legal challenges multiply

Awareness spread. Drivers dug out old paperwork. Some contacted lenders. Others spoke to representatives. Lenders responded in different ways. Some rejected complaints. Some offered small gestures.

At the same time, court cases began to test whether non-disclosure of commission, or the way it affected cost, could create an unfair relationship under the Consumer Credit Act. The results did not deliver a single, simple rule for every case, but they did point to a broad theme. If the customer was kept in the dark and paid more as a result, the relationship could be unfair.

This period turned fragmented concerns into a national question. Who should pay when the price of credit rose because of a salesperson’s incentive, and the customer was never told?

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2024: The scandal breaks into the mainstream

By 2024, the car finance scandal was headline news. The Court of Appeal ruled against several major lenders [3]. The court recognised that non-disclosure of commission and the mechanics of rate-setting could contribute to unfairness.

The FCA faced a practical challenge. Hundreds of thousands of complaints were coming through. Treating each one in isolation would create inconsistent outcomes. The regulator began shaping a coordinated approach so that customers would be treated fairly across the market.

At this point, more than 400,000 drivers had raised car finance claims via Reclaim247. Many more would follow.

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2025: The Supreme Court clarifies principles and the FCA designs the route to redress

The Supreme Court decision in August 2025 [4]

In mid-2025, the Supreme Court heard key appeals. The court had to answer a central question. Is paying commission unlawful on its own, or is the problem the lack of disclosure and the effect on cost?

The decision in August 2025 struck a balanced position. Paying commission is not automatically unlawful. However, failing to explain that commission exists, or using structures that increased the customer’s cost without clear disclosure, can create an unfair relationship. That keeps the door open for PCP claims and other car finance claims where secrecy and impact can be shown.

The FCA consultation and the extended deadline

Following the Supreme Court’s decision, the FCA launched a consultation on a motor finance compensation scheme [5]. The aim is to create a single route to resolve commission-related cases fairly and efficiently.

The consultation window was extended to 5 pm on 12 December 2025. The extension gives lenders, consumer groups and claims representatives time to provide detailed feedback on how the scheme should work. During this period, a pause on final complaint responses remains in place until 4 December 2025 [6]. That means lenders are recording and triaging complaints but are not issuing final decisions on most commission complaints until the pause lifts.

For customers, the practical takeaway is simple. Submit your complaint now so it is logged and ready for assessment when the new rules take effect.

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What the FCA wants the scheme to achieve

The regulator has been clear about its goals. The scheme should:

• Deliver consistent outcomes across lenders, not a patchwork of different treatments.
• Simplify the process for customers so people are not asked for the same paperwork again and again.
• Use standardised calculations for redress to avoid disputes and duplication.
• Speed up resolution once the rules are finalised in early 2026.

Internal modelling and independent reporting suggest the total redress could reach eight to nine billion pounds, with an average of around seven hundred pounds per eligible agreement [7]. These are estimates rather than promises, but they give a sense of the scale.

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The road to redress: what happens between now and payment

The next year looks like this.

• October to December 2025: Consultation period runs, now extended to 12 December 2025.
• 4 December 2025: Pause on final responses expected to end.
• Early 2026: FCA publishes the final rules and the scheme begins.
• By 31 July 2026: Lenders issue final responses to complaints.
• Late 2026: First payments expected for upheld cases.

If you are asking how long do car finance claims take, or when will PCP claims be settled, this timetable gives a realistic view. Most decisions will land between December 2025 and July 2026, with payments following from late 2026.

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What types of agreements are most likely to be in scope

The FCA has signalled three categories that matter most.

• Discretionary Commission Arrangements

Dealers could influence your interest rate and earn more for setting it higher. Banned for new loans since 2021, but older agreements remain under review.

• High or hidden commissions

Some loans carried large commissions that were not explained. In many cases the size of the commission was significant compared with the cost of credit. Where customers were not told clearly, and cost was affected, redress may be due.

• Restricted lender access

Some dealerships worked with one preferred lender without offering real comparisons. Customers were told it was the best deal without being shown alternatives. That lack of transparency can form part of a claim.

Who might be eligible

You may have a viable claim if you:

• Took out PCP or HP finance between 2007 and 2024.
• Were not told that the dealer received commission, or how it could affect your rate.
• Were offered a single finance option without a meaningful choice.
• Felt pressured to sign on the day.
• Paid a notably higher rate than someone with similar credit.

It does not matter if you no longer own the car or have lost your paperwork. Lenders must keep records and can retrieve your file.

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How to start a claim now

You do not need to wait for the scheme to be final. Starting now secures your place in the queue.

Step 1: Gather simple facts

Collect what you can:

• A credit report listing old finance accounts.
• Bank statements showing repayments.
• Emails or letters from the dealer or lender.
• Your vehicle registration and the year you took out finance.

If you cannot remember the lender, a representative can trace the account from your details.

Step 2: Send a short, clear complaint

Keep it factual and in plain English. Include:

• Your name and address history.
• Vehicle registration and, if known, the agreement number.
• The dealer and lender names.
• A simple explanation of what was not explained and why it matters.
• A request for a full review and a refund of any overpaid interest or undisclosed commission.

You can submit this yourself or ask a regulated representative to prepare and manage it for you.

Step 3: Acknowledgement during the pause

Lenders will acknowledge your complaint within a few weeks. During the pause, you will receive holding updates. Final decisions for commission cases are expected after 4 December 2025.

Step 4: Decision and calculation

Once the rules are live in early 2026, lenders will assess your file against the new framework and calculate redress where due.

Step 5: Payment

After you accept an offer, payment usually takes two to six weeks. If you disagree with the decision, you can take the case to the Financial Ombudsman Service, which typically requires three to six months to review appeals.

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Realistic timeframes at a glance

• Complaint submission and acknowledgement: one to two weeks
• Holding period during the pause: until 4 December 2025
• Assessment and decision window: December 2025 to July 2026
• Payment after acceptance: two to six weeks
• Ombudsman review if needed: three to six months

Most claims filed now should complete in late 2026.

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What slows claims down and how to avoid it

Missing documents

You do not need a perfect file, but the clearer your evidence, the faster the review. Include agreement letters if you have them, bank statements for repayments, and any dealer emails. If you are missing items, ask the lender to supply copies from their records.

Disputes about disclosure

If you say there was no explanation of commission and the lender suggests there was, the reviewer will look for proof. Keep your account as precise as you can. Name the dealership. Recall phrases used. Explain the effect on your decision or your cost.

Complex histories

Multiple cars, changes of address or name, early settlement and refinances all add work to the tracing stage. This does not harm your case, but it can add time. Start early so there is time to retrieve records.

High volumes

There will be surges around public milestones. Filing early puts your case closer to the front of the queue when the scheme begins.

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DIY or professional help

You can run a claim yourself. Many people will. Others may prefer to use a regulated representative such as a claims management company, particularly if they:

• Have several agreements to review.
• Have moved house or changed name and cannot easily gather records.
• Want someone to chase timelines, challenge a low offer, and keep the file organised.

If you choose help, check that the firm is FCA-authorised, ask for clear fees, and confirm when those fees apply. A good firm will keep the process simple and transparent.

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A practical checklist before you press send

• I have written a short, factual complaint.
• I have attached any agreement letters, bank statements and emails I can find.
• I have asked the lender to provide missing records.
• I have saved a copy of everything I sent.
• I have set a reminder to follow up in two weeks.
• I know that final responses for commission cases are expected between December 2025 and July 2026.

Frequently asked questions

Do I need my original agreement to start?

No. Begin with what you have and ask the lender to supply copies from their records.

Will complaining affect my credit score?

No. Raising a complaint does not harm your credit score. If unfair markers exist, they can be corrected when a case is upheld.

Is this only about PCP claims?

No. HP agreements can also be affected. PCP claims are common because balloon structures and commission practices often intersected.

How long do car finance claims take if everything is simple?

Once the pause ends and rules are live, straightforward files can be decided within the December 2025 to July 2026 window, with payments following later.

When will PCP claims be settled?

Most decisions are expected between December 2025 and July 2026, with payments beginning late 2026.

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The bigger picture: rebuilding trust in car finance

The car finance scandal is about more than refunds. It is about the trust people place in those who sell financial products. For years, drivers believed they were being priced on risk alone. Many were not told about incentives that could lift their costs.

The FCA’s intervention aims to reset that relationship. The coming year, from the extended consultation deadline on 12 December 2025 through to the final rules in early 2026, will shape a fairer system. With a standard route to redress, customers should see clear, consistent decisions rather than a lottery of outcomes.

Drivers who act now help themselves and contribute to that change. Filing a complaint today is not only a step toward your own refund. It is also a vote for transparency in the future.

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Conclusion: where we stand and what to do next

The timeline of the car finance scandal is long, but the direction is now clear. From the quiet rise of DCAs in 2007, to the FCA ban in 2021, through court rulings and the Supreme Court decision in 2025, the pieces have moved toward one outcome. Customers should be treated fairly, and where secrecy raised costs, money should return to those who paid it.

If you financed a vehicle between 2007 and 2024, take the simple steps outlined above. Send a short, factual complaint to your lender. Keep a tidy log. Ask for missing records. If you prefer, instruct a regulated representative.

The answers to how long do car finance claims take and when will PCP claims be settled are no longer guesswork. Most decisions will fall between December 2025 and July 2026. Payments are expected to begin late 2026.

A process that took years to surface will not resolve in a day, but it is finally moving with purpose. With the FCA’s framework close at hand, there is a clear and transparent route to reclaim what you are owed and to bring fairness back to car finance in the UK.

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References:

1. FCA extended consultation deadline of 12 December 2025 - https://www.fca.org.uk/news/statements/motor-finance-compensation-scheme-consultation-progress-and-timing
2. On 28 January 2021, the FCA banned discretionary commission arrangements for new motor finance - https://www.fca.org.uk/publication/consultation/cp24-15.pdf
3. The Court of Appeal ruled against several major lenders - https://www.judiciary.uk/wp-content/uploads/2024/10/Johnson-v-Firstrand-Bank-and-Hopcroft-v-Close-Brothers.pdf 
4. Supreme Court decision in August 2025 - https://supremecourt.uk/uploads/uksc_2024_0157_0158_0159_judgment_2bb00f4f49.pdf
5. the FCA launched a consultation on a motor finance compensation scheme - https://www.fca.org.uk/news/statements/fca-consults-motor-finance-compensation-scheme
6. pause on final complaint responses remains in place until 4 December 2025 - https://www.fca.org.uk/news/statements/firms-given-until-december-2025-respond-motor-finance-commission-complaints
7. total redress could reach eight to nine billion pounds, with an average of around seven hundred pounds per eligible agreement - https://www.fca.org.uk/news/press-releases/14m-unfair-motor-loans-compensation-proposed-scheme