Drivers across the UK will receive a major development today in relation to car finance claims [1]: the Financial Conduct Authority (FCA) has confirmed it will launch a consultation on an industry-wide redress scheme this October [2]. This is the latest move forward in terms of compensation for those affected by mis-sold car finance agreements. The news brings renewed hope that motorists who were wrongly charged or not fully informed may soon see a car finance refund, though the details are still being finalised.

Why This Matters: The Context Behind the Announcement

The FCA’s announcement comes in the wake of a landmark Supreme Court ruling and years of scrutiny over commission practices in the motor finance industry. Over the period from 2007 to 2021, some finance providers allowed brokers or car dealers to vary the interest rate (or otherwise adjust terms), often to increase commission without properly disclosing that to the consumer. These are known as discretionary commission arrangements (DCAs).

The FCA now says it will propose rules for firms to determine which customers “lost out” and deserve car finance compensation. The scheme is intended to be easier for consumers to use and the FCA expects to pay compensation to millions of mis-sold car finance customers next year. In setting out its plan, the FCA estimates that most redress amounts per eligible agreement will probably be around £950 [3]. While many drivers will welcome this development, questions remain around how the scheme will be structured, who qualifies, and how records, some of which may have been lost, will be retrieved.

Supreme Court Ruling & the “Unfair Relationship” Test

In its 1 August 2025 ruling, the Supreme Court considered whether the general nature of certain finance agreements established an “unfair relationship” under section 140A of the Consumer Credit Act [4]. In other words, were lenders (or brokers) and consumers placed in a position of unfairness as a result of issues such as non-disclosure of commissions, poor explanation of the terms, or vast disparity in bargaining power?

One significant takeaway is that the judgement did not simply impose liability across the board. Instead, it clarified that in some cases, non-disclosure or poor structuring of the deal might be treated as an unfair relationship but only where the totality of the circumstances justifies that conclusion.

Some observers note that while the Court did not accept that lenders always owe a fiduciary duty to consumers in these sales, it acknowledged that unfairness can arise even in agreements without a DCA so long as commissioners, disclosures, contract terms and consumer attributes indicate a relationship imbalance.

Because the test is fact-sensitive, the FCA’s forthcoming consultation is likely to explore which commission practices (discretionary or non-discretionary) will be in scope, and how to assess unfairness fairly across many cases.

What the Figures & Public Sentiment Reveal

The scale of the car finance scandal is vast. The Supreme Court’s ruling noted that approximately 14 million people may have been affected by mis-sold car finance deals between 2007 and 2021. With such large numbers, recoveries per person are likely to vary considerably.

Public trust is tepid. Reports suggest that only 23 % of people trust lenders to handle payouts fairly [5]. Many lenders have already raised concerns that some historical records may be missing or deleted.

The record-loss problem is significant: 57 % of potential claimants have moved house since their finance deal, and over 8 million have lost paperwork related to their agreement. This adds a major practical hurdle for individuals trying to make claims.

In response to the scheme rollout, some money experts advise patience or “sit on your hands and wait for the redress scheme” but that strategy is less clear-cut for those who cannot find their paperwork or don’t trust the original lender to act fairly.

At this point, millions believe they may be due compensation. A recent survey indicated over 23 million people think they might be owed something from the car finance scandal.

Why You Might Need Help: Considering a Claims Management Company

With the complexity of the new compensation scheme, and for those who have lost records, can't identify the original finance provider or don't trust them, there will be some who will want to use expert help.

A claims management company can assist with collecting missing information, liaising with lenders and regulators, and submitting a claim on your behalf. However, caution is warranted: fees can be high, and some firms may overpromise outcomes. The FCA has warned that using a claims firm might reduce your net compensation.

If you’re unsure about your lender, can’t locate paperwork, or just want an expert to fight your corner. Reclaim247 offers a no-paperwork, no-car reg, “no win, no fee” service. All that is needed is your name, address, and date of birth. Legal teams handle claims. One practical question you may have is how long does Reclaim247 take to process a claim. While no definitive time guarantee is published yet, the service emphasises that you can start your claim eligibility checks in 60 seconds.

Conclusion

Today is a significant day in the continuing car finance mis-selling saga. After years of argument and delay, the FCA has finally promised a redress consultation in October. The Supreme Court has ruled that some car finance agreements may have led to “unfair relationships” but many key questions remain on exactly which cases are affected, how redress will be calculated and what happens where records have been lost.

If you believe you were affected and lack paperwork, or simply want professional support, the services of a finance claims expert may be worth considering but weigh its costs carefully. In any case, keep a close eye on the FCA’s upcoming consultation. As the headline says, this is no longer just a future possibility; it’s a current update on car finance claims that may put money back in the pockets of eligible drivers.

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References:

1. major development today in relation to car finance claims - https://www.manchestereveningnews.co.uk/news/cost-of-living/drivers-receive-car-finance-compensation-32624001
2. the Financial Conduct Authority (FCA) has confirmed it will launch a consultation on an industry-wide redress scheme this October - https://www.fca.org.uk/news/press-releases/fca-consult-motor-finance-compensation-scheme
3. the FCA estimates that most redress amounts per eligible agreement will probably be around £950 - https://www.birminghammail.co.uk/motoring/motoring-news/14-million-drivers-could-receive-32193839
4. In its 1 August 2025 ruling, the Supreme Court considered whether the general nature of certain finance agreements established an “unfair relationship” under section 140A of the Consumer Credit Act - https://supremecourt.uk/uploads/uksc_2024_0157_0158_0159_judgment_2bb00f4f49.pdf 
5. only 23 % of people trust lenders to handle payouts fairly - https://www.slatergordon.co.uk/newsroom/consumers-trust-the-financial-conduct-authority-to-resolve-the-car-finance/