Regulator to unveil car finance compensation details as early complaints may secure faster payouts in 2026

LONDON — Millions of motorists are being urged to submit a car finance claim [1] over potentially mis-sold car finance before regulators confirm details of a nationwide compensation scheme. The Financial Conduct Authority is expected to outline its response to the ongoing car finance scandal by end of the month, including how car finance compensation and payouts 2026 will be handled.

Drivers who used personal contract purchase or hire purchase agreements between April 6, 2007, and Nov. 1, 2024, may be eligible to file car finance claims or a PCP claim. The issue centres on car finance mis-selling, where undisclosed commissions paid to brokers or dealers may have increased borrowing costs without customers’ knowledge.

Under the proposed process, once the scheme is announced there will be an implementation period of around three months, or up to five months for older agreements. Firms will then assess complaints and inform consumers within a further three months whether compensation is due and how much they will receive.

If the offer is accepted, payments will be made within one month, so many of the earliest car finance claims are likely to see car finance compensation paid in 2026. But for those yet to complain, the process could take longer as firms have to proactively contact all eligible customers and offer them the chance to opt in, so some of the PCP refund and car finance refund check results could spill into 2027. Consumers are therefore being urged to make their claims quickly, with the process being potentially much faster and simpler for those complaining now. There is no obvious way of finding out if you are eligible for a PCP claim or car finance refund without lodging a formal complaint.

Average car finance compensation is expected to be about £700 per claim [2], although final payouts will vary depending on individual agreements and circumstances.

New tools are being made available to help with claims as well. A car finance checker feature in the myEquifax app will let consumers see historic agreements dating back to 2007, which can help people find lenders and the information needed to make PCP claims and other car finance claims.

Some consumers may also explore legal routes, where claims taken to court could result in higher compensation than standard car finance refunds, depending on the outcome of individual cases.

The FCA is expected to launch the full redress scheme by the end of March [3], setting out how affected consumers can pursue car finance claims linked to the wider car finance scandal.

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References:

1. Millions of motorists are being urged to submit a car finance claim - https://www.independent.co.uk/tv/news/martin-lewis-car-finance-claim-b2936144.html
2. Average car finance compensation is expected to be about £700 per claim - https://www.fca.org.uk/news/press-releases/14m-unfair-motor-loans-compensation-proposed-scheme
3. The FCA is expected to launch the full redress scheme by the end of March - https://www.fca.org.uk/news/statements/timing-fca-motor-finance-announcement