Updated: 27 September 2025

Originally Published: 10 December 2024

Car finance mis-selling is now a major consumer protection issue in the UK. Motorists with Personal Contract Purchase (PCP) or Hire Purchase (HP) agreements between 2007 and 2021 may have received deals that were not fair, transparent or affordable. This has fuelled what many now call the car finance scandal.

In 2025 the picture has become clearer, but also more urgent. In August 2025, the Supreme Court handed down a ruling [1] that confirmed that non-disclosure of commissions can still create an “unfair relationship” under the Consumer Credit Act. The decision narrowed some legal arguments but kept a strong route open for consumers where secrecy about commissions and their size mattered.

At the same time, the Financial Conduct Authority (FCA) has kept its pause on final responses to commission-related complaints in place until 4 December 2025 [2]. This pause gives the regulator time to design a fair, consistent way to deliver car finance compensation. A formal consultation in October 2025 is expected to confirm how a redress scheme will work [3], with discretionary commission arrangements (DCAs) and other undisclosed commissions at its heart.

If you suspect your car finance deal was mis-sold, it is important to act now. Complaints can still be filed today and will be logged, even though lenders are not currently required to issue final responses until the pause ends or the scheme begins. This guide will help you understand who can claim car finance, how the process works, what evidence you need, and how much compensation might be available.

1. Who Can File a Car Finance Complaint?

The group of people who may be eligible is broad. If you had a PCP or HP agreement between April 2007 and January 2021, there is a good chance you are entitled to have your agreement reviewed as part of ongoing PCP finance claims.

1.1 Common reasons for complaints

• Undisclosed commissions: Dealers or brokers often received payments from lenders for arranging finance. These payments were rarely explained to customers. The Supreme Court confirmed in August 2025 that where commission secrecy disadvantaged a consumer, it can create an unfair relationship.
• Discretionary commission arrangements (DCAs): Under DCAs, dealers could set the interest rate higher to earn more commission. Customers were not told this was happening. The FCA banned DCAs in January 2021 [4] because they created a clear conflict of interest.
• Weak affordability checks: Some lenders approved finance without properly looking at income and expenses. Customers found themselves in agreements that consumed too much of their disposable income.
• Unclear balloon payments: Many PCP customers were expecting to own the car when they signed the agreement, but a large final payment was required. This may amount to car finance mis-selling if not explained clearly.
• Poor explanation of the total cost: Dealers paid particular attention to the monthly figure, often ignoring fees, term length, or the total cost of borrowing.

1.2 You do not need an active agreement

Even if your finance ended years ago, you may still be eligible. Complaints are about how the agreement was sold, not whether it is still ongoing. The FCA has confirmed that historic agreements are within scope of its review.

2. Understanding Car Finance Mis-Selling

2.1 The scale of car finance between 2007 and 2021

Approximately nine in ten new cars in the UK were purchased on finance in the late 2010s [5]. The default options were PCP and HP, which attracted drivers with lower upfront costs and flexibility. Millions of consumers thought they were simple agreements.

The issue was just how they were sold. Dealers and brokers were the first point of contact of most customers, but their financial incentives often came from lenders. Commissions were paid in secret, and with DCAs, dealers directly increased customer interest rates to boost their own earnings.

High volumes combined with low transparency allowed mis-selling to go unnoticed for more than a decade, leading to today’s car finance scandal.

2.2 Why commissions matter

If you were not told about commissions, you were not given the full picture. For example, a dealer might have suggested one product over another because it paid them more, not because it was better for you. In a DCA, the rate itself was manipulated. The FCA has said that these arrangements were unfair by design and removed them from the market in 2021.

3. How to File a Car Finance Complaint in 2025

The process is simple, though timings are affected by the FCA pause.

Step 1: Review your paperwork

• Look at your agreement and any written communication from the dealer. Ask yourself:
• Were commissions explained clearly?
• Was the balloon payment made obvious?
• Did the lender look properly at affordability?

If you cannot find your contract, you can request a copy from your lender. They are legally required to provide it.

Step 2: Complain to your lender

Write a complaint letter or email explaining why you believe your finance was mis-sold. Be as detailed as possible. Include:

• Your name, address, and contact details.
• Vehicle registration.
• Agreement number and start date.
• The reasons you think the deal was unfair.

Even during the pause, your complaint will be logged. This means it will be part of the system once the redress scheme begins.

Step 3: Wait for the response

Before the pause, lenders had eight weeks to issue a final response. At present, they are not required to do so until December 2025 or until a redress scheme starts. You might not hear back immediately, but submitting now guarantees your spot in the queue.

Step 4: Escalate to the Ombudsman if needed

When the pause ends, if your complaint is rejected or you are unhappy with the outcome, you can take it to the Financial Ombudsman Service (FOS) [6]. The FOS is free for consumers and has the power to order compensation where it finds in your favour.

3.1 Using PCP Claims Checkers

Before you write to your lender, you may want to use an online PCP claims checker. These tools, offered by many regulated claims management companies, ask a few simple questions about your finance deal. You’ll usually need to confirm the type of agreement, the dates it ran, and whether you remember being told about commissions or balloon payments.

The results are not binding, but they give a quick indication of whether your case is likely to be in scope. For many consumers, this is the easiest way to take the first step without digging out paperwork immediately.

3.2 Filing Through a Claims Management Company

Hire finance claims experts such as regulated claims management companies instead of handling it yourself. These firms handle the claim from start to finish, from gathering evidence, submitting complaints to lenders, following up, and escalating to the Ombudsman if required.

The advantage is convenience. You do not have to write letters or chase responses, and you benefit from the company’s experience with thousands of similar cases. The trade-off is that you will pay a fee if your claim is successful. Most companies operate on a no win, no fee basis, meaning you only pay if you receive compensation.

For some consumers, especially those with multiple agreements or complex circumstances, the reassurance of having finance claim experts handle the process outweighs the cost. For others, going direct to the lender and Ombudsman may be the better choice since it keeps 100% of any compensation.

4. How Long Will It Take?

This is one of the most common questions.

Before the pause: Straightforward complaints could be resolved in 6 to 16 weeks. Complex cases may take six months or more.

Since January 2024: The FCA paused complaint deadlines while it designed a mass redress approach. This pause has now been extended to December 2025.

The pause does not stop you from beginning a complain. It simply means you may need to wait longer for a final outcome. Once the FCA’s scheme is agreed, cases are expected to be processed in bulk. This could actually make outcomes faster overall, because lenders will no longer argue case by case.

5. How Much Compensation Could You Receive?

Compensation varies, but some useful benchmarks exist.

5.1 Refund of overpaid interest

If your interest rate was inflated by a DCA, you could receive back the difference.

Example:

A £12,000 PCP at 6 percent APR costs about £13,520 over four years.

At 10 percent APR, the same deal costs about £14,800.

The difference is £1,280, which could be refunded.

5.2 Repayment of hidden commissions

If your dealer was paid, for example, £500 by the lender and never told you, this may be refunded.

5.3 Compensation for distress and inconvenience

If the mis-sale led to arrears, defaults or repossession, you may receive additional compensation. The amount depends on the impact.

5.4 Credit file corrections

If your complaint is upheld, unfair defaults or late payments linked to the agreement can be removed from your credit report.

5.5 Average redress figures

The FCA has suggested that the average compensation for DCA cases is around £950 per agreement [7]. Some borrowers will receive less, others much more. Mid-range PCP finance claims often fall between £1,000 and £5,000, depending on loan size and term.

6. Which Lenders Are Involved?

The investigation is sector-wide and involves many of the UK’s most popular lenders [8]. If you took out a PCP or HP agreement through one of these firms, your contract could be in scope for review once the FCA’s redress scheme is finalised.

Here are some of the most common lender names consumers search for:

• Alphera Finance claims – BMW Group’s specialist finance arm, often linked with dealer-arranged PCP agreements.
• Audi Finance claims – Provided by Volkswagen Financial Services, used widely for PCP deals across the Audi network.
• Barclays Finance claims – A major UK bank with extensive motor lending through dealer networks.
• Black Horse claims – Part of Lloyds Banking Group, one of the UK’s largest providers of car finance.
• Blue Motor Finance claims – A fast-growing independent lender focused on broker-led PCP and HP products.
• BMW Finance claims – Official finance provider for BMW cars, structured through PCP and HP agreements.
• CA Auto Finance claims – Formerly FCA Automotive Services, supporting finance for Fiat, Jeep and other brands.
• Close Brothers claims – A leading independent lender has set aside funds for mis-selling complaints.
• Clydesdale Bank claims – Provided motor finance through dealer partnerships across the UK.
• Honda Finance claims – Captive finance arm for Honda vehicles, mainly PCP products.
• Hyundai Finance claims – Dealer-arranged finance covering Hyundai’s new and used car network.
• Mercedes Finance claims – The finance division of Mercedes-Benz, heavily reliant on PCP sales.
• Motonovo claims – A major lender of used car finance, often arranged by brokers.
• Northridge claims – Owned by Bank of Ireland, supplying motor finance through dealerships.
• PSA Finance claims – Brands covered included Peugeot, Citroen and Vauxhall before the Stellantis merger.
• Santander car finance claims – Among Britain's largest motor finance providers with over £1bn provisioned already.
• Toyota Finance claims – Finance division of Toyota GB offering PCP and HP agreements.
• Vauxhall Finance claims – Provided by Stellantis Finance, linked to Vauxhall dealer networks.
• Volkswagen Finance claims – One of the largest captive lender in the UK supporting VW, Skoda, and SEAT, as well as VW-branded cars.

Each of these lenders either used discretionary commission arrangements before the 2021 ban or worked with dealers and brokers who may not have disclosed commissions properly. The FCA’s redress scheme is expected to bring their historic practices under close review.

7. Why Filing Now Still Matters

Even with the pause in place, there are strong reasons to complain today.

Your complaint is logged: Filing now secures your place in the system. When the scheme begins, cases already on record will be dealt with first.

Avoiding deadlines: The FCA has said it may introduce cut-off dates, similar to the PPI scheme. Complaining now avoids the risk of missing out.

Quicker access to redress: Once payments start, backlogs are likely. Early complaints may move faster.

Protecting your financial future: A successful claim could not only refund money but also repair your credit file.

This is why now is the right moment to claim car finance before deadlines or backlogs set in.

8. Frequently Asked Questions

Can I complain if I have finished paying off my car finance?

Yes. Many agreements ended years ago, but the way they were sold can still be challenged. Complaints can be logged now and assessed once the FCA scheme begins.

Will making a complaint affect my credit score?

No. Complaining does not harm your credit score. If your case is upheld, unfair markers may be removed.

What if I refinanced or traded the car?

You may still be eligible. Refinancing often made the cost of borrowing worse, not better.

What if my documents say “a commission may be paid”?

Vague language may not meet the legal standard for disclosure. The Supreme Court confirmed in August 2025 that proper transparency matters, especially for large commissions.

Will I need to go to court?

Unlikely. The FCA is designing a scheme to handle claims in bulk without court action.

9. Conclusion: Protecting Your Rights in 2025

The mis-selling of car finance is now fully recognised as a major consumer scandal. The Supreme Court has clarified that commission secrecy can create unfairness, and the FCA is preparing a redress scheme to deliver car finance compensation at scale. With some 14 to 15 million historic agreements covered and redress of up to £18 billion possible [9], the stakes are high for consumers and lenders.

If you had a PCP or HP agreement between 2007 and 2021, do not wait for headlines or deadlines. File your complaint now. Doing so secures your place in the system and positions you to benefit when the FCA’s redress scheme comes into effect in 2026.

Car finance complaints are about more than refunds. They are about fairness, transparency, and trust. Acting today could protect both your finances and your future.

__________

References:

1. In August 2025, the Supreme Court handed down a ruling - https://supremecourt.uk/uploads/uksc_2024_0157_0158_0159_judgment_2bb00f4f49.pdf 
2. Financial Conduct Authority (FCA) has kept its pause on final responses to commission-related complaints in place until 4 December 2025 - https://www.fca.org.uk/news/statements/firms-given-until-december-2025-respond-motor-finance-commission-complaints
3. A formal consultation in October 2025 is expected to confirm how a redress scheme will work - https://www.fca.org.uk/news/statements/fca-consult-compensation-scheme-motor-finance-customers
4. FCA banned DCAs in January 2021 - https://www.fca.org.uk/news/press-releases/fca-ban-motor-finance-discretionary-commission-models
5. More than nine in ten new cars in the UK were purchased on finance in the late 2010s - https://www.am-online.com/news/finance/2022/11/02/uk-car-finance-debt-soars-to-40bn
6. Financial Ombudsman Service (FOS) - https://www.financial-ombudsman.org.uk/consumers/complaints-can-help/credit-borrowing-money/car-finance/complaints-about-commission
7. The FCA has suggested that the average compensation for DCA cases is around £950 per agreement - https://www.birminghammail.co.uk/motoring/motoring-news/14-million-drivers-could-receive-32193839
8. The investigation is sector-wide and involves many of the UK’s most popular lenders - https://www.which.co.uk/news/article/car-finance-fca-investigation-what-you-need-to-know-a4eXb5u8VeBy#:~
9. 14 to 15 million historic agreements covered and redress of up to £18 billion possible - https://www.moneysavingexpert.com/news/2025/09/car-finance-redress-treasury-committee-update/