Updated: 13 May 2026

Originally Published: 09 October 2024

What Has Changed Since 2025

A year ago, much of the discussion around the car finance scandal was still in the realms of speculation.

Uncertainty surrounded whether or not compensation would be paid, how the FCA car finance investigation would play out, and whether it was even worth taking any action.

The picture has changed a lot since then.

The FCA has set out in 2026 how car finance claims will be processed [1] and the industry is now moving towards the compensation stage. As a result, we’re seeing more drivers up and down the UK proactively reviewing their agreements and checking whether they may be entitled to a car finance refund.

If you took out a PCP claim or hire purchase agreement, there is a genuine chance your deal could fall within the scope of car finance mis-selling. What many people are only now realising is that the issues go beyond discretionary commission arrangements and can include a wider range of commission and disclosure practices.

This leads to a practical question.

Should you handle a mis-sold car finance claim yourself, or work with a finance claims expert or claims management company?

Key Takeaway

You do not need a finance claims expert to make a car finance claim.

However, the rules have become more detailed in 2026. It is not just about whether commission existed, but whether it had a meaningful impact on your agreement.

Because of this, many people choose to work with finance claims experts or a PCP claims company to help identify whether their agreement actually qualifies under FCA car finance rules.

What the FCA Car Finance Scheme Covers in 2026

The FCA car finance framework now covers agreements taken out between April 2007 and November 2024 [2].

This is an important update.

While discretionary commission arrangements were banned in January 2021 [3], the redress scheme goes beyond DCAs. It also includes other types of commission and disclosure issues that continued after that point.

In practical terms, the scheme covers:

• Personal Contract Purchase agreements
• Hire purchase agreements
• Other dealership arranged finance

Why 2021 Still Matters

Whilst the time period is open until 2024, the year 2021 is a significant date.

Prior to 2021:

• Prevalence of discretionary commission
• Dealers able to increase your interest rate to gain more commission
• These scenarios form the strongest case for a DCA claim

Post-2021:

• DCAs were prohibited
• Other issues still arose such as:
• Excessive undisclosed commission
• Limited lender panel
• Lack of transparency over how deals were packaged

Which means:

• Pre-2021 agreements are more likely to lead to car finance compensation
• Post-2021 agreements may still be eligible, but it is more limited in criteria

What Actually Qualifies Under FCA Rules

One of the biggest changes in 2026 is how eligibility is defined.

It is no longer enough for commission to exist.

For a car finance claim to qualify, the FCA now focuses on whether:

• Commission was not properly disclosed
• The structure of the deal limited your choices
• The commission was high enough to affect fairness
• You paid more as a result

This applies to both PCP claims and other car finance claims.

Why Car Finance Claims Are Increasing

The increase in car finance claims is not just about awareness. It is also about clarity.

For years, PCP claims were presented as a simple way to finance a car. Most customers focused on the monthly payment and assumed the rate they were given was fixed.

What has become clear is that this was not always the case.

Under discretionary commission arrangements, dealers could adjust the interest rate within a range. This meant the cost of the agreement could be influenced by commission, not just your financial profile.

On top of this, other issues have come into focus:

• Charges that were not clearly explained
• Balloon payments that were not fully understood
• Lender panels that were more limited than they appeared

Taken together, these practices explain why the car finance scandal has affected so many agreements.

What Has Changed in 2026

The FCA Has Defined the Redress Scheme

The FCA has now set out how compensation will be assessed.

Lenders are expected to review historic agreements and identify customers who may have been affected. However, the process is not fully automatic.

Some customers will be contacted early, while others may not be identified straight away. This is why many people are choosing to check their position now.

The Legal Position Is More Balanced

The Supreme Court confirmed that commission itself is not automatically unfair [4].

This is a key point.

What matters is whether the commission had a meaningful impact on the agreement. This has narrowed the number of eligible claims compared to earlier expectations, but it has also made the rules more consistent.

Payout Expectations Are Clearer

Estimates have now stabilised.

Most projections suggest:

• Average car finance compensation of around £800 to £850
• Typical claims between £500 and £1,500
• Higher value cases exceeding £2,000

The final car finance refund depends on the structure of your agreement and how much extra you paid.

Your Options for Making a Car Finance Claim

There are still three main ways to proceed.

Work With a Finance Claims Expert or a Claims Management Company

A claims management company handles the process on your behalf.

This usually includes identifying your agreements, preparing your claim, and dealing with the lender directly.

For many people, this is the simplest approach, particularly where agreements are older or incomplete.

Most firms operate on a no win no fee basis. They will take a percentage of your compensation if your claim is successful.

Many also provide a car finance refund check as a starting point. This allows you to enter your information, trace your agreements and determine if you may have a valid car finance claim before you choose what to do next.

Use a Legal Firm

Some claims need more supporting evidence.

This might be the case if:

• The agreement is of higher value
• The contract has a number of issues
• The lender is contesting the claim

This will allow a more detailed review, but costs and structures will differ.

Make the Claim Yourself

You can make a claim to your lender directly.

This is a free option, and can be effective in simple cases.

It can be time-consuming and hard work. You will need to research, understand your agreement, and rebut the position of the lender.

For some people, this is manageable. For others, it becomes more complex than expected.

Why Work With a Finance Claims Expert?

For many people, the decision to use finance claims experts is about reducing effort rather than increasing complexity.

Car finance claims are not always clear cut. A single agreement may involve several issues, and it is not always obvious which ones matter.

A finance claims expert can:

• Trace agreements you may have forgotten
• Identify where commission or structure may have affected your deal
• Prepare your claim properly from the start
• Handle communication with lenders
• Challenge outcomes if needed

In practice, this often means a smoother process with fewer delays.

What to Consider Before Choosing a Finance Claims Expert or Legal Firm

Choosing the right firm can make a noticeable difference.

Check Regulation

A claims management company must be authorised by the Financial Conduct Authority.

A solicitor must be regulated by the Solicitors Regulation Authority.

This means the firm has met recognised standards and you are protected if things go wrong.

Understand the Fees

Most firms will operate on a no win no fee basis. However, you should still be clear about the cost.

Ask:

• The percentage they will take
• If VAT is included
• Any extra charges

Transparent and upfront communication is a positive sign.

Look at Reviews

Reviews can help set realistic expectations around how a firm operates.

Look for consistent comments around communication, transparency and how claims are managed.

Check Relevant Experience

Car finance claims are a specialist area.

It helps to work with a firm that understands discretionary commission arrangements and has handled similar cases before.

Be Realistic

No firm can guarantee a payout.

If a company promises a specific level of car finance compensation, it is worth being cautious.

A good finance claims expert will explain what is possible based on your agreement.

How Much Compensation Could You Receive?

Compensation varies depending on the agreement.

Lower impact cases may fall between £100 and £500. More typical claims tend to sit between £500 and £1,500, while higher value cases can exceed £2,000.

What matters most is how much the agreement cost you and whether commission played a role in that cost.

In most cases, a car finance refund will include repayment of excess interest, along with additional interest on that amount. If the agreement is still active, there may also be adjustments to the remaining balance.

How to Check Car Finance Claim Eligibility

You do not need to figure everything out yourself.

A simple starting point is to:

• Identify your agreement
• Confirm your lender
• Review how the deal may have been structured

For many people, the easiest step is to complete a car finance refund check.

You can submit your details through a claims management company or finance claims expert. They can track down your agreements, spot potential issues and determine if your situation may meet FCA car finance criteria. This is particularly helpful if your agreements are old or you no longer have the paperwork.

FAQs

What is a car finance claim?

A car finance claim is a request for compensation because your car finance agreement may have been unfair.

The agreement often features a commission not properly explained to you, an interest rate unfairly increased without your knowledge, or an absence of a genuine choice of lenders.

What is the car finance scandal?

The car finance scandal involves the use of commission based finance arrangements which were not made clear to customers.

Customers could be sold agreements with increased interest rates, allowing dealers to charge them more for the same vehicle and earn higher commission.

Millions of agreements in the UK have been affected by the scandal, causing the FCA car finance compensation scheme.

What is a PCP claim?

A PCP claim is a claim for a Personal Contract Purchase agreement that you could have been mis-sold.

PCP deals were among the most popular car finance types and many contained hidden commission or misleading language regarding costs and payments.

If your PCP included hidden commission or you were misled in any way you could be entitled to a PCP refund.

Who can make a car finance claim?

If you entered into a car finance agreement between April 2007 and November 2024 and think it may have been unfair, you may be able to make a claim.

This includes existing and past agreements.

You do not have to still own the car and you do not need all the paperwork to get started.

Did all car finance agreements qualify for compensation?

No. Not all agreements will qualify for compensation.

The FCA has introduced stricter rules, so it is not enough for commission to simply exist. The key question is whether it actually made a difference to what you paid.

Your claim has a better chance of success if the commission increased your rate of interest, restricted your choice of lender or made the agreement more expensive in total.

Certain agreements may be excluded. For example, where commission was fully explained, very little was paid or there is no obvious financial loss.

How much car finance compensation could I receive?

Car finance compensation varies depending on your agreement.

In 2026, most estimates suggest:

• On average, about £800 to £850
• For most claims, between £500 and £1,500
• More than £2,000 in higher impact cases

The precise amount will depend on the details of how your agreement was set up and how much extra you paid.

When will payouts be made in 2026?

Payouts will not all happen at the same time. The timing depends on when your agreement was taken out and whether you have already complained.

The FCA has split claims into two groups:

• Scheme 1 covers agreements from April 2007 to March 2014. These are likely to take longer, with decisions expected by late 2026 and payments likely from early 2027.
• Scheme 2 agreements are those which fall between April 2014 and November 2024. The expectation is that these will be much quicker with a decision being made by September 2026 and some payments made from November 2026.

If you have already made a complaint your claim could be processed quicker. If you have not, lenders will contact eligible customers, but this can take longer and some payments may run into 2027 or even 2028.

The key point is that payouts will be made in stages, not all at once, and some customers will receive compensation earlier than others.

Do I need to use a finance claims expert?

No. You can make a car finance claim yourself.

However, many people use finance claims experts or a claims management company as it makes the process easier where agreements are older or missing details.

It can also help your claim be prepared correctly from the outset.

What does a claims management company do?

A claims management company can help you identify your agreements, determine if they were mis-sold and manage your car finance claim from start to finish.

This usually involves communicating with lenders, gathering evidence and overseeing the process for you.

Lots of firms will also run you through a car finance refund check first to see if you might have a claim.

What is a car finance refund check?

A car finance refund check is a process to see if your agreement could be entitled to compensation.

You can give your details to a claims management company or finance claims expert who will trace your agreements and establish whether they may be covered by FCA car finance criteria.

This can be the quickest way to start, especially if you do not know the name of your lender or the details of the agreement(s).

Can I make a claim if I can't find my agreement?

Yes. You don't need the original paperwork.

It's possible to track down your agreement using your personal details, like your name, address history, and date of birth.

This is also why many people begin with a car finance refund check instead of trying to find paperwork on their own.

Can I make a claim on more than one agreement?

Yes. If you have had more than one vehicle or finance agreement then each one can be assessed separately.

This means that you could be entitled to more than one car finance claim and therefore multiple payouts.

What should I do next?

The simplest stage is to check whether your agreement may be eligible.

This can be done by either identifying your lender and checking your agreement, or by processing a car finance refund check through a claims management company or finance claims specialist.

It provides a clear starting point with no decision needed up front.

Final Thoughts

The car finance scandal has moved into a more defined stage.

The FCA car finance framework now provides a clearer path for car finance claims, but it also requires a more careful assessment of whether an agreement actually qualifies.

Discretionary commission arrangements remain the strongest basis for a claim, but they are no longer the only factor.

If your agreement may have been affected, the most important step is to check where you stand.

Whether you choose to handle the process yourself or work with a finance claims expert, acting now puts you in a stronger position for payouts 2026.

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References:

1. The FCA has set out in 2026 how car finance claims will be processed - https://www.fca.org.uk/publications/policy-statements/ps26-3-motor-finance-consumer-redress-scheme
2. The FCA car finance framework now covers agreements taken out between April 2007 and November 2024 - https://www.fca.org.uk/publication/policy/ps26-3.pdf
3. discretionary commission arrangements were banned in January 2021 - https://www.fca.org.uk/news/press-releases/fca-ban-motor-finance-discretionary-commission-models
4. The Supreme Court confirmed that commission itself is not automatically unfair - https://supremecourt.uk/uploads/uksc_2024_0157_0158_0159_judgment_2bb00f4f49.pdf