Updated: 06 November 2026
Originally Published: 30 June 2025
The wait for car finance compensation has been longer than many motorists expected. When the Financial Conduct Authority (FCA) introduced its compensation scheme in March 2026 [1], some payments were expected to begin before the end of the year.
Legal challenges have since put parts of the scheme on hold. For motorists who have already complained, or are thinking about making a claim, the biggest question has been when compensation might finally arrive.
There has now been an important development.
On 3 November 2026, the FCA confirmed that lenders can choose to offer voluntary settlements [2] while the wider scheme remains partially suspended. Barclays Partner Finance has announced plans to contact selected customers with early compensation offers.
This means some motorists could receive money before the Upper Tribunal hears the legal challenges in February 2027.
However, early payments are not available to everyone. The wider compensation scheme has not restarted, and most motorists are still waiting for the outcome of the legal proceedings.
The FCA has also introduced new expectations to help protect customers receiving early offers.
This car finance compensation update explains what has changed, who may qualify for compensation, the latest claims deadlines and what motorists can do while the legal proceedings continue.
Key takeaways
- The FCA introduced its Motor Finance Consumer Redress Scheme on 30 March 2026.
- The scheme covers potentially eligible agreements entered into between 6 April 2007 and 1 November 2024.
- Four organisations are challenging aspects of the scheme before the Upper Tribunal.
- Parts of the scheme remain suspended, although lenders must continue preparing.
- On 3 November 2026, the FCA published new expectations for lenders making voluntary compensation offers.
- Barclays Partner Finance has confirmed plans to offer early settlements to selected customers.
- The FCA expects early offers to be at least equal to the compensation available to the individual customer under the current scheme calculation.
- Customers should have at least one month to consider an early settlement offer.
- The Upper Tribunal hearing is scheduled for 16 February to 3 March 2027.
- The FCA estimates average compensation of approximately £829 per eligible agreement [3], although individual amounts will vary.
- Consumers can still complain directly to their lender for free.
- The published scheme rules include a 31 August 2027 deadline for consumers who have not been contacted by their lender, although the legal challenges could affect future arrangements.
What is the car finance scandal about?
For years, motorists arranging finance through dealerships may not have known how much commission the dealer was earning.
The concern was not simply that dealerships received commission. It was whether customers were given enough information about those payments and how they could affect the finance deal.
In some cases, dealers could earn more by arranging higher interest rates. Other agreements involved large commissions or financial relationships between lenders and dealers that were not properly explained.
As a result, some customers may have paid more for their finance than they thought was possible.
Customers began complaining they were being mis-sold car finance.
But not all finance was mis-sold. The dealership receiving commission doesn't mean that automatically the customer is due compensation.
What has changed in November 2026?
November has brought several developments for motorists following the car finance scandal.
The FCA has introduced expectations for early compensation offers
On 3 November 2026, the FCA published new guidance for lenders considering voluntary settlements.
The regulator supports lenders offering compensation before the legal challenges are resolved, provided customers receive fair offers and understand what accepting them means.
Under its expectations, an early offer should be worth at least as much as the maximum compensation available to that individual customer under the existing scheme's calculation rules.
Lenders should explain how they worked out the amount, including relevant commission arrangements, compensatory interest and any adjustments.
Customers should also have at least one month to consider the offer.
The FCA has made clear that accepting an early settlement is optional. Customers can choose to wait for the legal proceedings instead.
However, accepting a full and final settlement generally means they cannot seek further compensation for the same commission matters if the scheme later becomes more generous.
The FCA has not approved individual settlement offers. Responsibility for calculating and explaining each offer remains with the lender.
Barclays has confirmed plans for early car finance compensation
On 3 November 2026, the bank confirmed that it intends to contact selected customers who previously complained about historic motor finance commission arrangements.
Some customers could receive compensation before Christmas or during January 2027, depending on when they receive and accept an offer.
However, Barclays is not offering early compensation to every customer.
Its initial arrangements concern selected complaints that meet the bank's criteria. Customers who do not receive an offer may still be eligible under the wider FCA car finance scheme.
Other lenders may decide to make voluntary offers, although there is no requirement for them to do so.
The FCA will publish information about participating lenders to help customers check whether offers are genuine.
The Tribunal has published further reasons concerning evidence
The decision addressed preparations for the main hearing, including the economic evidence that the parties can present.
This matters because the challenges involve disagreement over how the FCA assessed consumer harm and developed its compensation calculations.
However, the decision was procedural.
The Tribunal has not ruled that the scheme is unlawful or ordered changes to the compensation calculation.
The substantive issues will be considered at the hearing scheduled for February and March 2027.
Why is the FCA compensation scheme facing legal challenges?
Four organisations have challenged aspects of the Motor Finance Consumer Redress Scheme:
- Volkswagen Financial Services
- Mercedes Benz Financial Services
- Crédit Agricole Auto Finance
- Consumer Voice
The three lenders have questioned parts of the FCA's approach, including its assessment of consumer harm and the proposed compensation framework.
Consumer Voice has raised different concerns, including whether the scheme would provide sufficient compensation to affected motorists.
The FCA maintains that an industry wide scheme is the most efficient way to resolve historic complaints.
These remain the positions of the parties. The Tribunal has not decided which arguments should succeed.
Until the legal proceedings are resolved, the partial suspension remains in place unless the legal position changes.
What does the partial suspension mean for consumers?
The FCA's compensation scheme has not been cancelled.
The Upper Tribunal suspended certain parts of the scheme in July 2026 [6] pending the outcome of the legal challenges.
As part of those proceedings, lenders are not required to calculate or pay compensation under the affected parts of the rules.
They do still need to continue to prepare for the scheme and follow the rules that are still in force.
This includes identifying agreements that may be affected, collecting commission data and preparing to deal with complaints.
Some customers may receive letters confirming that compensation is not payable under the applicable rules.
Other motorists may not hear from their lender until the legal proceedings have concluded.
Not receiving a letter does not mean compensation has been approved or refused.
The important November development is that voluntary early settlements can take place separately from the suspended compensation process.
A lender can choose to resolve selected complaints without waiting for the Tribunal's judgment.
However, this does not mean the wider scheme has resumed.
Who may qualify for car finance mis-selling compensation?
If you took out vehicle finance between 6 April 2007 and 1 November 2024, your agreement could fall within the FCA's scheme.
This includes many Personal Contract Purchase (PCP) and Hire Purchase (HP) agreements, alongside certain other regulated vehicle finance arrangements.
The FCA has divided the scheme into two groups:
Scheme 1: Agreements entered into between 6 April 2007 and 31 March 2014.
Scheme 2: Agreements entered into between 1 April 2014 and 1 November 2024.
The groups have different implementation arrangements under the published scheme rules.
However, having an agreement within these dates does not automatically mean you're owed compensation.
Eligibility depends on how the finance was arranged, the commission involved, what was disclosed and whether the agreement meets the FCA's requirements.
Which commission practices may qualify?
The FCA scheme targets specific arrangements which may have created an unfair relationship between lenders and their customers.
Such schemes include discretionary commission arrangements. Dealers could adjust the interest rate offered which could lead to them receiving a higher commission.
The FCA prevented new discretionary commission arrangements in January 2021 [7].
Other potentially relevant arrangements include unusually high commissions and contractual ties between lenders and brokers.
Undisclosed commission may be important where customers were not given relevant information about the financial relationship behind their agreement.
However, the scheme also contains exclusions.
These include certain zero interest agreements, relatively small commission amounts and some unusually high value loans.
Can you claim if the finance has already ended?
Potentially, yes.
You do not necessarily need to own the vehicle or still be making payments.
Selling the car, settling the agreement early or handing the vehicle back at the end of a PCP contract does not automatically prevent a complaint.
What matters is the original finance arrangement and whether it meets the relevant compensation rules.
How much car finance compensation could motorists receive?
The FCA estimates average car finance compensation of approximately £829 per eligible agreement.
It expects around 12.1 million agreements to qualify, with total consumer redress estimated at £7.5 billion if 75% of eligible consumers participate.
These are projections, not guaranteed payouts.
For many eligible agreements, the calculation considers both estimated financial loss and commission information, with compensatory interest added where appropriate.
Certain agreements involving particularly large commissions may be treated differently.
This means two motorists with similar finance amounts could receive different levels of compensation.
A car finance refund could be higher or lower than £829. Some agreements will not qualify at all.
Could early compensation offers be lower than the FCA's scheme amount?
The FCA has said lenders making voluntary offers should provide no less than the maximum redress available to the individual consumer under the current scheme calculation.
That does not mean everyone must be offered £829.
The amount should reflect the customer's particular agreement and the relevant calculation rules.
Lenders are also expected to explain how the figure was reached.
However, accepting an early settlement comes with a trade off.
If the legal challenges eventually result in higher compensation, customers who accepted a full and final settlement generally cannot claim the difference for those settled matters.
If the final outcome would have resulted in less compensation, they keep the amount already agreed.
What about PCP claims?
Personal Contract Purchase has been a popular way to finance vehicles in the UK.
A typical PCP agreement involves a deposit, monthly repayments and an optional final payment if the customer wants to keep the car.
However, the FCA scheme is not concerned with PCP agreements simply because of their payment structure.
The relevant questions concern commission arrangements, disclosure and whether the agreement meets the scheme rules.
Consumers exploring PCP claims should therefore avoid assuming that every PCP agreement was mis-sold.
A PCP claim may be worth investigating if there are concerns about an unfair commission arrangement.
Similarly, PCP finance claims depend on the circumstances of each agreement.
A PCP compensation claim may still be relevant even if the vehicle was returned or the finance ended years ago.
For motorists looking into mis-sold PCP car finance, the first step is usually identifying the lender and the date the agreement began.
A PCP claim check may help identify agreements worth reviewing, but it cannot guarantee a refund.
When will car finance compensation be paid?
There is still no confirmed date for payments under the suspended parts of the FCA scheme.
The Upper Tribunal hearing is scheduled for 16 February to 3 March 2027 [8].
The judges are expected to reach a decision in the following months.
If the scheme is upheld and the judgment is not appealed, the FCA expects payments under the wider scheme to begin in 2027.
However, that timetable remains uncertain.
If the Tribunal requires changes, the FCA may need to reconsider parts of the scheme before payments can proceed.
Further legal action could also delay compensation.
For motorists who were previously expecting payouts 2026, those original expectations no longer reflect the wider scheme's position.
3 March 2027 is the scheduled end of the Tribunal hearing, not a compensation payment date.
Could some motorists receive compensation before 2027?
Yes.
The FCA's November announcement means some lenders can offer voluntary settlements before the legal challenges conclude.
Barclays Partner Finance has confirmed plans to make early offers to selected customers.
Some of those customers could receive payments before Christmas 2026 or during January 2027.
However, these are separate arrangements.
They do not mean compensation has restarted for every lender or that all eligible motorists will receive an early payment.
What is the latest car finance claims deadline?
The published scheme rules include a 31 August 2027 deadline for consumers who have not been contacted by their lender but believe they may qualify and wish to join the scheme.
However, this date must be considered alongside the ongoing legal challenges.
The partial suspension has interrupted parts of the original timetable. The Tribunal's eventual decision could affect how the scheme proceeds.
The date remains in the published rules, but motorists should check the latest FCA guidance rather than assuming that every original deadline will remain unchanged.
Different arrangements may apply to customers who have already complained, received a lender response or started court proceedings.
The car finance claims deadline should not be confused with the Tribunal hearing dates or a promise that compensation will be paid by August 2027.
Consumers concerned about missing an opportunity to complain do not need to wait until the hearing before contacting their lender.
Should you make a car finance claim now or wait?
Consumers can still complain about potentially unfair historic motor finance commission arrangements.
A useful starting point is to establish which lender provided the finance and when the agreement began.
Old bank statements may show regular payments to the lender. Credit reports, emails and historic correspondence can also help identify previous agreements.
If the original paperwork is missing, that does not necessarily prevent a complaint.
The FCA has provided guidance for lenders dealing with incomplete historic records.
A car finance refund check may also help identify agreements worth investigating.
If you've had several finance agreements, each should be considered separately.
Having financed multiple vehicles does not automatically mean compensation is due on all of them.
You can complain directly to your lender for free.
Alternatively, you can choose assistance from an FCA regulated claims management company or solicitor. Professional representation may involve fees, so check the terms before signing up.
Anyone who has already submitted a complaint generally does not need to submit it again because the hearing timetable has changed.
Will making a complaint now lead to an early offer?
Not necessarily.
Early settlements are voluntary, and lenders can decide whether to make offers to particular customers.
Submitting a complaint now does not guarantee that your lender will offer compensation before the Tribunal hearing.
However, raising concerns about a potentially unfair agreement remains an option while the wider scheme is suspended.
Should you accept an early car finance compensation offer?
An offer will be welcome after months of waiting.
But you should know what you're letting yourself in for if you accept.
Settlement early means you could get money now rather than wait for the Tribunal's decision.
The trade off is that accepting a full and final settlement will ordinarily close the commission matters covered by the offer.
Before agreeing, check which finance agreement the offer relates to and how the lender calculated the amount.
The explanation should cover relevant compensatory interest, deductions, adjustments and any caps that apply.
You should also understand whether the settlement covers every part of your complaint.
For example, if you complained about commission alongside separate affordability concerns, the lender should explain how those other issues will be handled.
If you've appointed a solicitor or claims management company, speak to them before accepting an offer. Your representation agreement may include notification requirements or professional fees.
Customers should have at least one month to consider an offer under the FCA's expectations.
If anything is unclear, ask the lender for an explanation or seek independent advice.
It is also worth checking that an unexpected compensation message is genuine. Contact your lender through its official website rather than using links or telephone numbers in an unsolicited message.
What happens if the Tribunal rules against the FCA?
The outcome of the legal challenges remains uncertain.
If the Tribunal upholds the scheme, implementation may continue, subject to any further proceedings and the rules that apply.
If it finds particular provisions unlawful, the FCA may need to revise its approach.
A more substantial decision against the scheme could require the regulator to reconsider how historic complaints should be resolved.
The FCA has already told lenders to prepare for the possibility that the scheme may not proceed in its current form.
That could mean returning to ordinary complaint handling arrangements rather than relying on the planned industry wide compensation process.
However, no such outcome has been determined.
The Tribunal's decision will establish the next legal steps. It will not automatically mean every affected consumer is entitled to a particular refund.
Current FCA car finance position at a glance
QuestionCurrent position
Has the scheme been cancelled?
- No. It remains partially suspended.
Can motorists still complain?
- Yes.
Must lenders keep preparing?
- Yes.
Are payments taking place under the suspended scheme rules?
- No.
Can lenders make voluntary early offers?
- Yes.
Has Barclays confirmed plans for early offers?
- Yes, for selected customers.
Must other lenders make early offers?
- No.
How long should customers have to consider an offer?
- At least one month.
When is the Tribunal hearing?
- 16 February to 3 March 2027.
When is judgment expected?
- In the following months.
Are wider scheme payments guaranteed in 2027?
- No.
What is the published deadline for uncontacted consumers?
- 31 August 2027, subject to the legal position and future updates.
Frequently asked questions
Can I still make a car finance claim?
Yes. You can complain directly to your lender for free while the legal proceedings continue. You do not need to wait until the Tribunal hearing to raise concerns about a potentially unfair commission arrangement.
Has the FCA cancelled its compensation scheme?
No. Parts of the scheme remain suspended, but lenders must continue preparing and comply with the requirements that remain in force.
Have car finance compensation payments started?
Not under the suspended parts of the wider FCA scheme. However, some lenders can choose to make voluntary settlements. Barclays Partner Finance has announced plans to make early offers to selected customers.
When will PCP claims be settled?
There is no confirmed date for payments under the wider scheme. The Tribunal hearing is scheduled to finish on 3 March 2027, but the judges may take several months to reach a decision. Some customers may receive voluntary settlements earlier.
Can I still claim if I no longer own the vehicle?
Potentially. Selling, trading in or returning the vehicle does not automatically prevent the original finance agreement from being reviewed.
Do I need my original agreement?
No. You can still pursue a potential claim even if you've lost the paperwork. Old bank statements, credit reports or correspondence may provide the name of the lender. You may also try contacting the lender directly.
Can I make more than one PCP claim?
Yes. If you've had several PCP agreements, you can investigate each one. However, they will not necessarily all qualify. Eligibility depends on the commission arrangements and circumstances of each agreement.
Will everyone with PCP car finance receive a refund?
No. Having a PCP agreement does not automatically mean it was unfair or that compensation is due.
What is a PCP refund?
A PCP refund is compensation that may be payable where a PCP agreement meets the relevant redress rules or another legal basis for compensation.
Can a claims company speed up compensation?
No. A claims management company or solicitor can’t make the Tribunal reach a decision earlier or get your compensation paid earlier. They can help you track down old finance agreements and make the complaint on your behalf, but they can’t speed up how long it takes to get your payout. They also can’t force a lender to offer you an early settlement.
Can I turn down an early settlement offer?
Yes. You don’t have to accept an early offer. You can wait until the Tribunal has resolved the legal issues and your complaint will be processed. However, you should be aware that you may not get more compensation if you wait.
Will I get more compensation later if I accept an early payout?
In most cases, no. If you accept a full and final settlement offer you will normally be unable to make a further claim for additional commission payments in relation to the same issue. This is even if there have been changes to the FCA scheme which would have entitled you to more money if you had waited.
Is the 31 August 2027 deadline still relevant?
Yes. That date remains in the published scheme rules for consumers who have not been contacted by their lender. However, the legal challenges could affect future arrangements, so it is worth checking FCA updates.
What should motorists take away from the latest developments?
The November announcements have given some motorists a possible route to compensation sooner than expected.
Barclays Partner Finance has confirmed plans to offer early settlements, and the FCA has set expectations to help customers understand those offers before making a decision.
However, this does not mean the wider car finance scandal has been resolved.
The compensation scheme remains partially suspended, with the main legal challenges scheduled to be heard between 16 February and 3 March 2027.
For customers receiving an early offer, the priority is understanding the amount and what accepting it would mean for their complaint.
For everyone else, it is still worth checking historic finance agreements and raising concerns where appropriate.
Consumers do not have to wait for the Tribunal hearing to make a complaint. However, making a claim now does not guarantee an early offer or a faster payout.
The next major developments will come from lenders announcing voluntary settlements and the Tribunal's consideration of the challenges to the wider scheme.
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References:
- the Financial Conduct Authority (FCA) introduced its compensation scheme in March 2026 - https://www.fca.org.uk/publications/policy-statements/ps26-3-motor-finance-consumer-redress-scheme
- On 3 November 2026, the FCA confirmed that lenders can choose to offer voluntary settlements - https://www.fca.org.uk/news/press-releases/fca-sets-expectations-firms-making-car-finance-settlement-offers
- The FCA estimates average compensation of approximately £829 per eligible agreement - https://www.fca.org.uk/publication/policy/ps26-3.pdf
- Barclays Partner Finance has become the first lender publicly identified by the FCA as planning voluntary settlements - https://news.sky.com/story/barclays-to-begin-car-finance-payouts-months-before-outcome-of-legal-challenge-13607016
- On 2 November 2026, the Upper Tribunal published a decision explaining earlier directions concerning evidence and disclosure in the legal challenges - https://www.gov.uk/tax-and-chancery-tribunal-decisions/motor-finance-redress-scheme-ca-auto-finance-and-others-v-the-financial-conduct-authority-2026-ukut-00423-tcc
- The Upper Tribunal suspended certain parts of the scheme in July 2026 - https://www.fca.org.uk/news/statements/motor-finance-scheme-partially-suspended
- The FCA prevented new discretionary commission arrangements in January 2021 - https://www.fca.org.uk/news/press-releases/fca-ban-motor-finance-discretionary-commission-models
- The Upper Tribunal hearing is scheduled for 16 February to 3 March 2027 - https://www.fca.org.uk/news/statements/motor-finance-legal-challenge-be-heard-february-2027