Updated: 29 June 2026
Originally Published: 16 April 2025
Key takeaways
Before diving into the detail, here are the most important points consumers should understand:
- The car finance FCA investigation covers many agreements signed between 6 April 2007 and 1 November 2024.
- The FCA estimates around 12.1 million agreements may potentially fall within scope [1].
- Approximately 75% of affected consumers could ultimately receive compensation.
- Average FCA car finance compensation is currently estimated at around £829 per eligible agreement [2].
- PCP claims and Hire Purchase complaints form a significant part of the review.
- The FCA announced its compensation scheme on 30 March 2026 [3].
- Legal challenges from several organisations have created uncertainty around implementation.
- The FCA has stated that a Tribunal hearing is unlikely before October 2026 [4].
- Compensation payments that many consumers expected during payouts 2026 are now increasingly expected to begin during 2027.
- Consumers can still complete a car finance refund check or PCP claim check while the legal process continues.
The FCA car finance investigation at a glance
The FCA car finance investigation is one of the largest consumer finance reviews ever undertaken in the UK.
What began as concerns about commission arrangements in vehicle finance agreements has developed into a nationwide compensation programme that could affect millions of motorists.
The review focuses on whether consumers received enough information to make informed decisions when entering into finance agreements and whether certain sales practices resulted in consumers paying more than they otherwise would have done.
For the average motorist, commission disclosure, lender panels and discretionary commission arrangements will all be new and alien concepts. But these are all at the very centre of the new car finance scandal. If you are unfamiliar with the ins and outs of a PCP agreement it may be a good idea to understand the product in question before proceeding with a potential claim for compensation. Check out this blog for info: What Is PCP Car Finance? A Complete Guide to How It Works
Understanding the car finance scandal
The car finance scandal centres on concerns that some consumers may have paid more than necessary for vehicle finance because important information was not fully disclosed during the sales process.
For many years, consumers assumed their interest rate was determined by factors such as:
- their credit profile
- lender criteria
- affordability checks
- wider market conditions
Subsequent regulatory investigations raised concerns that commission arrangements sometimes played a greater role than consumers realised.
What began as concerns about commission arrangements has evolved into what is now widely known as the car finance scandal UK, affecting millions of motorists across the country.
The FCA has identified three key areas of concern.
Discretionary Commission Arrangements (DCAs)
Before January 2021, some dealers and brokers could increase the interest rate offered to a consumer and receive higher commission as a result.
Many consumers were unaware this was possible.
The FCA banned Discretionary Commission Arrangements in January 2021 [5], but agreements signed before then remain a major focus of today's review.
If you would like a deeper explanation of how these arrangements operated, our guide to Discretionary Commission Arrangements explores the issue in more detail.
Excessive commission structures
The FCA has also raised concerns about commission arrangements that may not have been adequately explained to consumers.
In some cases, consumers were told commission "may be paid" without receiving meaningful information about how that commission worked or whether it affected borrowing costs.
Many consumers are now reviewing whether undisclosed commission payments may have affected their agreements and borrowing costs.
Understanding the difference between various commission models can also help consumers assess whether a potential claim may exist.
Restricted lender choice
Some consumers may have been presented with only one finance option without understanding whether alternative lenders or cheaper finance products were available.
Where lender recommendations were influenced by commercial arrangements rather than consumer interests, questions may arise about whether the agreement was sold fairly.
These issues now form the basis of many car finance claims and PCP finance claims, and complaints involving mis-sold car HP & PCP finance.
What happened on 30 March 2026?
The most significant development since this article was originally published occurred on 30 March 2026.
On that date, the Financial Conduct Authority announced its nationwide motor finance redress scheme.
The regulator estimates:
- approximately 12.1 million agreements could potentially fall within scope
- around 75% of consumers whose agreements fall within scope may ultimately receive compensation
- total compensation across the industry could reach approximately £7.5 billion
- average compensation may be around £829 per eligible agreement
The scheme covers many regulated motor finance agreements signed between 6 April 2007 and 1 November 2024.
For consumers, this represented the clearest indication yet that widespread car finance compensation may become available.
It also shifted the conversation from whether compensation would happen at all to how compensation will be delivered and when motorists might receive it.
Which agreements are covered by the FCA scheme?
One of the most common questions consumers ask is whether their particular finance agreement falls within the FCA's review.
The FCA's motor finance redress scheme covers many regulated agreements signed between 6 April 2007 and 1 November 2024.
This includes:
- Personal Contract Purchase (PCP)
- Hire Purchase (HP)
- Conditional Sale agreements
- Many Lease Purchase agreements structured as regulated credit
The scheme generally applies to agreements taken out for personal use. Certain sole traders and small partnerships may also be included where the finance arrangement falls within the relevant regulatory framework.
Consumers who are unsure about the type of finance they had should not assume they are excluded. A car finance refund check or PCP claim check can often help identify the agreement type and determine whether further investigation may be worthwhile.
It is important to note that not every agreement signed during this period will automatically qualify for compensation. The FCA's review focuses on how the agreement was sold, including whether commission arrangements, disclosure practices, or lender relationships may have affected the outcome for the consumer.
Why compensation may be delayed until 2027
When the FCA announced the scheme, many consumers expected compensation payments to begin during 2026.
That position has changed significantly.
The FCA's compensation framework is currently facing legal challenges [6] from:
- Consumer Voice
- Volkswagen Financial Services
- Mercedes-Benz Financial Services
- Crédit Agricole Auto Bank
These organisations have challenged aspects of the FCA's proposed methodology and implementation approach.
The regulator continues to defend the scheme and maintains that a centralised compensation programme remains the quickest and fairest route for consumers.
However, the FCA has confirmed that it remains unclear when the Upper Tribunal will hear the challenges and has stated that a hearing is unlikely before October 2026.
As a result, compensation payments that many consumers expected during payouts 2026 are now increasingly expected to begin during 2027.
The FCA has also warned that if the scheme were overturned, alternative approaches such as a complaints-led process could take significantly longer and cost the industry billions more to administer.
Consumers who want a broader overview of how redress may be calculated can read our guide to car finance compensation and claims.
Understanding your rights under UK car finance law
The FCA car finance investigation is ultimately about consumer rights.
Whether you had PCP car finance, Hire Purchase, or another regulated vehicle finance agreement, UK law provides important protections designed to ensure finance products are sold fairly and transparently.
The main legal protections come from:
- The Consumer Credit Act 1974
- The Consumer Rights Act 2015
- FCA rules and guidance
- Financial Ombudsman Service complaint procedures
These protections sit at the heart of many modern car finance claims and PCP claims.
Your right to transparent information
Consumers should never have to guess how much a finance agreement will ultimately cost.
Before entering into a regulated agreement, consumers should receive information that is clear, accurate, and not misleading.
This includes:
- the APR and interest rate
- the total amount repayable
- monthly repayments
- fees and charges
- commission arrangements where relevant
- end-of-agreement obligations
With PCP car finance deals it is important for consumers to know about the balloon payment at the end, mileage restrictions and end of term options.
A lot of mis-sold PCP car finance claims come from consumers who, only after taking out the deal, discover information they feel should have been made clear at the start.
Many of today's complaints focus on whether key information was explained clearly enough before the agreement was signed, particularly where commission arrangements influenced borrowing costs.
Your right to fair treatment
The FCA requires firms to act honestly, fairly, and professionally throughout the sales process.
Consumers should not be:
- pressured into making immediate decisions
- given misleading information
- prevented from considering alternatives
- encouraged to enter unsuitable agreements
Many concerns within the wider car finance scandal relate to whether consumers were given a genuine opportunity to make informed decisions.
Understanding your rights before signing any finance agreement remains one of the best ways to avoid problems in the future. Our guide on how to make sure the system works in your favour explains practical steps consumers can take when arranging vehicle finance.
Your right to fair contract terms
Consumers are entitled to contracts that are transparent and fair.
Vehicle finance agreements should clearly explain:
- fees
- settlement terms
- optional products
- penalties
- end-of-contract obligations
The Consumer Rights Act 2015 requires contractual terms to be fair and understandable.
Where terms are unclear or disproportionately favour one party, questions may arise about whether the agreement was presented appropriately.
Your right to cancel
Many consumers are unaware that most regulated vehicle finance agreements include a cooling off period.
This right exists to protect consumers from rushed decisions and high pressure sales tactics.
While the practical consequences will depend on the circumstances of the agreement and whether the vehicle has already been collected, the cooling off period provides an important safeguard that allows consumers time to reconsider their decision.
Your right to complain
Consumers who believe they may have experienced car finance mis-selling have the right to raise car finance complaints directly with their lender.
Complaints can be submitted free of charge and do not require legal representation.
Consumers may wish to complain if they believe:
- commission was not disclosed properly
- important information was omitted
- alternative finance options were not presented fairly
- the agreement was not explained clearly
- they were pressured into signing
The FCA continues to encourage consumers to complain directly to lenders if they have concerns about historic agreements.
Your right to seek compensation
Where an agreement is ultimately found to have involved unfair practices, consumers may be entitled to compensation.
Depending on the circumstances, this could include:
- FCA car finance compensation
- car finance refund payments
- PCP refund payments
- interest related redress
- other forms of car finance compensation
The FCA's nationwide redress scheme was created to provide a more consistent approach to compensation across the industry.
For consumers affected by mis-sold car finance, the objective is not simply to identify problems but to ensure fair redress where financial harm has occurred.
Your right to escalate a complaint
If a complaint cannot be resolved directly with a lender, consumers may be able to escalate the matter to the Financial Ombudsman Service.
The Ombudsman independently reviews disputes between consumers and financial firms and can determine whether compensation or other remedies may be appropriate.
This remains an important safeguard regardless of how the FCA compensation scheme ultimately develops.
How could FCA car finance compensation be calculated?
Many consumers understandably want to know how compensation might be worked out.
While the final methodology remains subject to legal challenges and implementation decisions, the FCA has indicated that compensation should aim to put affected consumers back into the position they would likely have been in had the relevant issues not occurred.
Depending on the circumstances, FCA car finance compensation could potentially include:
- refunds of excess interest
- compensation linked to commission arrangements
- associated interest payments
- other forms of financial redress
The exact amount will depend on factors such as the size of the agreement, the finance product involved, the commission structure used, and the individual circumstances of the case.
This is why compensation can vary significantly between consumers, even where agreements appear similar on the surface.
How to check whether your agreement may be affected
Many consumers are unsure whether they should investigate further.
A car finance claim may have further grounds for investigation if:
- the agreement was entered into between 6 April 2007 and 1 November 2024
- the agreement was a PCP car finance or Hire Purchase agreement
- you were not told about how commission arrangements work
- you were shown only one lender
- borrowing rates appeared to be very high
- the sales process was rushed or confusing
This isn't definitive proof that your car finance was mis-sold.
But it does mean that in the majority of cases consumers look further into this.
Car finance refund checks and PCP claim checks
One of the most common misconceptions is that consumers need all of their paperwork before they can start exploring their options.
In reality, many motorists no longer have copies of agreements signed years ago.
This is where a car finance refund check or PCP claim check can be useful.
These assessments are designed to identify whether an agreement may potentially fall within the FCA review period and whether further investigation may be worthwhile.
Most checks require only basic information such as:
- name
- date of birth
- address history
- contact details
Many consumers begin with an online eligibility checker or a car finance refund check to establish whether their agreement may potentially fall within the FCA review period.
For motorists who have changed address, changed lender, or lost paperwork over the years, a PCP claim check or car finance refund check can provide a useful starting point.
What information helps support a claim?
While lenders hold many of the records required to assess complaints, providing accurate information can still help the process run more smoothly.
Useful information may include:
- vehicle registration number
- lender name
- approximate agreement dates
- dealership information
- copies of finance documents where available
- relevant correspondence
While lenders hold many of the records required to assess complaints, providing accurate information and supporting evidence can still help the process run more smoothly.
Consumers should not worry if they cannot locate every document immediately. Missing paperwork is extremely common, particularly for agreements signed many years ago.
Claims management companies vs DIY complaints
Consumers generally have several options when pursuing a car finance claim.
Complain directly to the lender
Consumers can submit complaints directly to lenders free of charge.
This remains the approach encouraged by the FCA.
Use a solicitor
Some consumers choose legal representation, particularly where agreements are complex or involve multiple disputes.
Use claims management companies
Many motorists prefer additional support throughout the claims process.
Claims management companies may assist with:
- tracing historic agreements
- gathering documentation
- completing eligibility assessments
- monitoring regulatory developments
- managing communications
Many consumers also choose to work with finance claims experts when they no longer have access to historic paperwork or are unsure where to start.
Should I use a PCP claims company?
There is no requirement to use a representative when pursuing a car finance claim.
However, some consumers choose to work with a PCP claims company because they would prefer assistance with eligibility checks, paperwork, and communications throughout the process.
If you decide professional support may be beneficial, our guide on choosing a PCP claims company explains what factors consumers should consider before appointing a representative.
Frequently asked questions
What is the FCA car finance investigation?
The FCA car finance investigation looks at historic commission structures and sales techniques used across the motor finance sector. The investigation spans thousands of agreements executed from 6 April 2007 to 1 November 2024 and has resulted in the FCA's nationwide redress scheme.
What is FCA car finance compensation?
FCA car finance compensation is potential redress that may be available to you, if your car finance deal is covered by the FCA's compensation scheme. This may include redress for overcharged interest, commission related redress and interest payments on the above.
What is a PCP claim?
A PCP claim is a type of claim concerning a Personal Contract Purchase (PCP) agreement that was potentially impacted by commission arrangements, disclosure problems, or any other form of mis-selling of car finance.
What is a PCP compensation claim?
A PCP compensation claim is a type of request for compensation linked to a PCP agreement in which a consumer feels they have incurred financial losses as a result of inadequate disclosure of important information in the sales process.
What is a PCP claim check?
A PCP claim check is an eligibility check that can help you see if your Personal Contract Purchase agreement may be worth investigating further. Most PCP claim checks are quick and easy and require only basic personal information. You can often complete them online.
What is a car finance refund check?
A car finance refund check is there to help you as a consumer understand if a finance agreement could potentially fall in the FCA review period and if further investigation may be worthwhile.
Can I still make a claim if I no longer own the vehicle?
Yes. Many car finance claims and PCP car claims are in respect of agreements which have already ended, and the vehicle has been sold, returned or replaced.
Will payouts happen in 2026?
Probably not. The FCA's redress scheme is being challenged in the courts by Consumer Voice, Volkswagen Financial Services, Mercedes-Benz Financial Services, and Crédit Agricole Auto Bank. The FCA has indicated that a Tribunal hearing is unlikely before October 2026, therefore compensation payments are now increasingly expected to start in 2027. Consumers should be cautious if an organisation is guaranteeing payouts 2026 or immediate compensation.
Can I still complain whilst the legal challenges continue?
Yes. Consumers can continue to complain directly to lenders, complete a PCP claim check or car finance refund check and gather information, as they would expect to do in the normal course, while legal challenges continue.
What happens if the FCA scheme is overturned?
The FCA has required all lenders to put in place contingency plans, should part or all of the scheme be successfully challenged. Options may include a revised scheme or further consultation or complaints-led approach.
Do I need a claims management company?
No. Consumers can make a complaint to lenders directly and it won’t cost a penny. However, some people prefer to use a claims management company or finance claims expert to help them with paperwork, communication, and eligibility.
Can I claim if my agreement has ended?
Yes. In fact, many car finance claims relate to agreements that have already ended, completed, been refinanced, or the car in question sold on. An agreement ending does not immediately disqualify a consumer from pursuing a car finance claim or PCP claim in the event they suspect their finance may have been mis-sold to them.
What should consumers do now?
Although compensation payments may now be delayed until 2027, there are still practical steps consumers can take today.
First, consider completing a car finance refund check or PCP claim check to understand whether your agreement may potentially fall within the FCA review period.
Second, gather any information you still have, such as finance documents, vehicle registrations, lender details, or historic correspondence. Even partial information can be useful.
Third, avoid signing agreements with multiple representatives at the same time. The FCA has warned that this can create confusion and may result in multiple fees being charged.
Finally, keep informed about developments in the FCA car finance process. While the legal challenges continue, lenders are still preparing for the next phase of the compensation programme and consumers can still take steps to understand their position.
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References:
- The FCA estimates around 12.1 million agreements may potentially fall within scope - https://www.fca.org.uk/publication/policy/ps26-3.pdf
- Average FCA car finance compensation is currently estimated at around £829 per eligible agreement - https://www.bbc.com/news/live/czx94evl5lrt
- The FCA announced its compensation scheme on 30 March 2026 - https://www.fca.org.uk/publications/policy-statements/ps26-3-motor-finance-consumer-redress-scheme
- The FCA has stated that a Tribunal hearing is unlikely before October 2026 - https://cardealermagazine.co.uk/car-finance-compensation-payouts-pushed-back-until-at-least-2027/324762
- The FCA banned Discretionary Commission Arrangements in January 2021 - https://www.fca.org.uk/news/press-releases/fca-ban-motor-finance-discretionary-commission-models
- The FCA's compensation framework is currently facing legal challenges - https://consumervoice.uk/cars/fca-car-finance-compensation-challenge/
- Under the Consumer Credit Act 1974, consumers generally have 14 days to withdraw from a regulated credit agreement after signing - https://statutes.uk/consumer-credit-act-1974