Updated: 30 October 2025

Originally Published: 22 March 2025

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Close Brothers Finance is one of the major lenders to come under fire as a tidal wave of mis-selling accusations crashes through the UK’s car finance sector. Thousands of drivers who entered into Hire Purchase (HP) or Personal Contract Purchase (PCP) deals could now be in line for a Close Brothers refund based on unfair loan terms, undisclosed commissions and rip-off interest rates.

With new developments from the Financial Conduct Authority (FCA) and a landmark Supreme Court ruling, thousands of customers are asking, “Can I claim against Close Brothers Finance?” This guide explains how the scandal unfolded, who can claim, what compensation could look like, and how long a car finance claim may take to pay out.

Why Close Brothers Finance Claims Are Rising

The explosion in the number of claims against Close Brothers Finance is down to the fact that car finance deals were mis-sold. People were not told how their loans were arranged and this included secret dealer commissions, which meant they were paying more to borrow the money.

These commissions, in which a lender paid a dealer more money for putting a higher interest rate on a loan, incentivised dealers to put their profits over their customers. Drivers may have ended up paying hundreds or even thousands of dollars more over the course of their contracts.

The Supreme Court Ruling and Its Impact

On 1 August 2025 the Supreme Court delivered a judgement [1] which determined that Close Brothers' mis-sold finance cases would be dealt with in a different way. In one of three test cases that went to the Supreme Court (Marcus Johnson's case), the court decided that the lender had treated the customer unfairly by raising interest rates to pay commissions not disclosed at the time.

The Court ruled that such conduct breached the Consumer Credit Act, setting a powerful precedent for future claims. After the ruling, the FCA indicated that it planned to set up a UK-wide compensation scheme, suggesting that lenders such as Close Brothers may have to pay refunds to thousands of customers.

For context, the full background is outlined in What Is the Close Brothers Scandal? Key Facts and Compensation Explained.

FCA’s Nationwide Compensation Proposal

If you took out car finance in the past 17 years, you could be eligible for compensation under the FCA’s proposed redress scheme. The plan aims to return money to drivers who were overcharged because of hidden commission models and unfair lending practices, part of the larger car finance scandal.

The FCA has set the consultation period to run until November 2025, with the potential remortgage of financial agreements spanning from April 2007 to November 2024 [2].

The regulator has suggested that as many as 14 million consumers could be eligible to receive cash back from this ruling, with average refunds of around £700 per customer [3]. The estimated cashback amount to customers is in excess of £8 billion.

The FCA is reviewing responses before confirming final rules by December 2025. If approved, the compensation framework will begin in 2026, making it one of the largest consumer redress programmes in UK history. For the latest updates, visit new information about car finance claims in the UK.

What Makes a Close Brothers Agreement Unfair

There are three key practices that may qualify for a Close Brothers claim:

1. Discretionary Commission Arrangements (DCAs)
   Under these agreements, brokers were permitted to change your interest rate. The higher the rate, the higher the broker's commission. Customers were rarely told this. The FCA banned DCAs in 2021 [4] because they led to unfair relationships.
2. High Commission or Hidden Commission Deals
   Many loans had high commissions (often over 35% of the cost of credit and not disclosed to you) which increased the monthly repayments and overall cost of the loan.
3. Exclusive Lender Arrangements
   Some brokers only used certain lenders, making customers think they had a choice when in fact other options were better.

If your dealer/lender has not been up front about this, your finance agreement may be considered unfair per FCA guidance.

Real Case Example: Ms. S’s Refund

A real case highlights the issue. Ms. S took out a Hire Purchase (HP) Agreement with Close Brothers Finance in July 2017 [5]. She later found out that she had been charged £1,981.60 because of the loan’s unclear terms and hidden commissions. After she complained, Close Brothers agreed to repay the money. This shows that consumers who are affected can get overpayments back and have unfair terms changed.

How to Check If You’re Eligible

You may be eligible for a Close Brothers refund if:

• Your agreement included hidden or discretionary commissions.
• You were not told how your loan’s interest rate was set.
• Loan terms, balloon payments, or charges were unclear or misleading.
• You noticed excessive interest rates compared to standard market rates.

These signs indicate your agreement could have been mis-sold. To assess your eligibility, review your paperwork for missing disclosures and unexplained rate mark-ups. For step-by-step help, see How to Claim Against Close Brothers Finance: Step-by-Step Guide.

How to Start Your Close Brothers Claim

Steps to claim refund for your PCP if you feel mis-sold.

1. Gather Your Loan Documents
   Look for references to any commission, unclear interest rate and if any terms are not explained to you, they can all help in making your case.
2. Contact Close Brothers Finance
   Provide written evidence of mis-selling and a complaint to the lender, who must look into the complaint and respond. However, following FCA guidelines, lenders and other financial firms now have until December 2025 to give their final response [6].
3. Escalate to the Financial Ombudsman (FOS)
   In the event of you not getting a response or if the lender dismisses your complaint, you can take your case to the Financial Ombudsman for impartial investigation.
4. Work with a Finance Claims Expert
   Should you find this all a little overwhelming, you may wish to seek the support of a claims management company that specialises in PCP mis-selling. They will manage your case for you (generally on a no-win, no-fee basis) and will make sure that your claim is both appropriately submitted and maximised.

How Much Compensation Could You Receive?

Pay varies based on size of the loan, the commission percentage and the rate of interest charged. The FCA estimates average discretionary commission payments are in the region of £700 per agreement, but there are some that are higher.

Your refund could include:

• Reimbursement of excess interest payments.
• Reduction of your outstanding loan balance.
• Additional compensation for financial distress or inconvenience.

Each claim is unique, but if your loan was mis-sold, the payout can significantly reduce what you owe or even result in a full refund.

How Long Do PCP and Car Finance Claims Take to Pay Out?

A frequent question is “How long does a PCP claim take?” or “When is the PCP payout?”

The timeline varies. A straightforward complaint might conclude within a few weeks, but complex cases involving Close Brothers mis-sold finance or FOS reviews could take several months. With the FCA’s extended deadlines, most outcomes are now expected from late 2026.

In general:

• Close Brothers claim investigations: 8–12 weeks (paused under FCA scheme).
• FOS referrals: 6–12 months, depending on complexity.
• Full FCA redress payouts: Expected to begin in 2026.

Are Close Brothers Refunding?

Yes but the process is ongoing. While refunds are not yet available, the lender has already set aside significant funds to cover potential refunds following the FCA’s investigation into Close Brothers compensation claims. However, most payments will be issued once the FCA finalises its national redress framework in 2026.

Consumers can still submit complaints now to protect their eligibility while waiting for the official rollout.

FAQs

Will I get a refund from Close Brothers?

If your car finance was mis-sold to you with hidden commissions and unfair lending from Close Brothers, you may well be entitled to a refund.

How long do Close Brothers claims take?

Close Brothers claims timescales vary as each case is different. A straightforward Close Brothers complaint could be concluded in a few weeks but if the complaint is more complex and needs to be referred to the Financial Ombudsman, this could take several months.

Do I need a solicitor for my Close Brothers PCP claim?

No, you don’t need a solicitor, but it’s in your best interests to instruct a finance claims expert or use a trusted PCP claims company. This can reduce the stress of filing since they handle the end-to-end process.

Close Brothers PCP claims are not always simple, as the sale is complex, and so it can be difficult to know whether you’re eligible. Using a trusted and experienced finance claims company can help you get the results you deserve.

What happens if Close Brothers rejects my claim?

If your claim is rejected by Close Brothers, the case can be referred to the Financial Ombudsman, who can rule on whether you are eligible for a refund due to mis-selling.

Final Thoughts

The Close Brothers Finance scandal has shone a light on widespread failings in the sale of car finance around the country. Recovering your money could take a while but drivers now have a clear route to compensation.

Do you think your agreement may have been mis-sold to you? Check your paperwork, look for hidden commissions or high interest rates you weren't told about and make a claim early. Follow FCA rules or use a finance claims expert you trust to know the ins and outs of finance claims and make sure your claim is correctly assessed when the payments start to be made.

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References:

1. On 1 August 2025 the Supreme Court delivered a judgement - https://supremecourt.uk/uploads/uksc_2024_0157_0158_0159_judgment_2bb00f4f49.pdf
2. The FCA has set the consultation period to run until November 2025, with the potential remortgage of financial agreements spanning from April 2007 to November 2024 - https://www.fca.org.uk/news/statements/fca-consults-motor-finance-compensation-scheme
3. The regulator has suggested that as many as 14 million consumers could be eligible to receive cash back from this ruling, with average refunds of around £700 per customer - 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/publication/consultation/cp24-15.pdf
5. Ms. S took out a Hire Purchase (HP) Agreement with Close Brother’s Finance in July 2017 - https://www.financial-ombudsman.org.uk/decision/DRN-3726469.pdf
6. following FCA guidelines, lenders and other financial firms now have until December 2025 to give their final response - https://www.fca.org.uk/news/statements/firms-given-until-december-2025-respond-motor-finance-commission-complaints