Concerns grow that some financially stretched drivers could be excluded from payouts

LONDON - Around 1.1 million lower-value motor finance agreements may fall outside the FCA car finance compensation scheme, raising concerns that some drivers affected by the car finance scandal could miss out on payouts 2026 despite wider allegations of mis-sold car finance.

The FCA has launched a car finance redress programme to compensate motorists [1] for undisclosed hidden commission arrangements on finance agreements entered into between April 2007 and November 2024. The FCA expects the programme to become one of the UK's largest consumer redress exercises in recent years, with lenders incurring costs of approximately £9.1 billion.

Lower-value agreements under increased scrutiny

Concerns are now focusing on commission thresholds built into the compensation framework.

Under the FCA’s current approach, agreements involving commission payments of £120 or less before April 11, 2014, or £150 or less after that date, are considered less likely to have influenced a customer’s decision or broker behaviour [2]. Those agreements may therefore fall outside the scope of compensation.

Opponents of the move say it could unfairly impact less well-off drivers who took out smaller loans to purchase lower-value vehicles [3] or vans, although they could have also been victims of car finance mis-selling.

Millions of agreements still potentially eligible

While some of the lower value deals may be out of scope, overall the FCA estimate that there are around 12 million finance agreements which could still be in scope for the wider compensation scheme.

The regulator introduced the FCA car finance programme following concerns that consumers were not properly informed about commission arrangements linked to PCP and hire purchase agreements.

As awareness of the car finance scandal continues to spread, motorists across the UK are increasingly reviewing older agreements and carrying out a car finance refund check to determine whether they may have grounds for a car finance claim or PCP claim.

Legal battle continues over compensation scheme

The compensation programme remains subject to legal challenges from both consumer representatives and lenders.

Consumer groups argue that parts of the scheme may leave some drivers undercompensated, while lenders including Volkswagen Financial Services, Mercedes-Benz Financial Services and Crédit Agricole Auto Finance are challenging the scale and structure of the redress plan [4].

The legal disputes have left millions of car finance claims and PCP claims facing uncertainty while court proceedings continue.

Drivers urged not to assume they are excluded

Motoring experts are urging drivers not to rule themselves out of compensation just because they borrowed less money on their finance package.

Drivers who believe they may have been affected by hidden commission arrangements could still potentially qualify for car finance compensation, a car finance refund or a PCP refund depending on the circumstances of their agreement and the outcome of the legal process surrounding the FCA car finance scheme.

Payouts 2026 still face uncertainty

The ongoing legal challenges continue to affect the expected timetable for payouts 2026, with hearings not expected until later this year.

Until more information becomes available, consumers have been urged to hold on to finance agreements, lender letters and any other documentation they may have connected to a potential claim as part of the growing car finance scandal.

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References:

1. The FCA has launched a car finance redress programme to compensate motorists - https://www.fca.org.uk/publications/policy-statements/ps26-3-motor-finance-consumer-redress-scheme
2. Under the FCA’s current approach, agreements involving commission payments of £120 or less before April 11, 2014, or £150 or less after that date, are considered less likely to have influenced a customer’s decision or broker behaviour - https://www.fca.org.uk/publication/policy/ps26-3.pdf
3. Opponents of the move say it could unfairly impact less well-off drivers who took out smaller loans to purchase lower-value vehicles - https://www.belfasttelegraph.co.uk/business/uk-world/poorer-drivers-more-likely-to-miss-out-on-car-finance-payouts-lawyers-say/a/153224063.html
4. lenders including Volkswagen Financial Services, Mercedes-Benz Financial Services and Crédit Agricole Auto Finance are challenging the scale and structure of the redress plan - https://www.theguardian.com/business/2026/may/01/fca-legal-challenges-compensation-scheme-car-loan-motor-finance