Motorists urged to act before March 30 announcement as mis-sold car finance payouts could begin in 2026

LONDON — Millions of motorists are being urged to submit a car finance claim ahead of an effective April deadline [1] as regulators prepare to confirm a nationwide compensation scheme. The Financial Conduct Authority is expected to outline its final approach to the car finance scandal after markets close on March 30 [2], likely around 5 PM, following the conclusion of its consultation in December 2025.

The watchdog placed a temporary freeze on firms dealing with any  car finance claims in January. That moratorium was set to expire on 31 May 2026, when firms can start accepting complaints under the new redress scheme.

The scheme could affect up to 14 million agreements across personal contract purchase and hire purchase deals taken out between April 6, 2007, and November 1, 2024 [3]. Total car finance compensation is estimated to exceed £8 billion, making it one of the largest financial redress programmes in the UK.

According to the FCA, motorists may be eligible for car finance compensation if their agreement involved at least one of three issues linked to car finance mis-selling. These include discretionary commission arrangements, which account for about 11.4 million agreements, cases of unfairly high commission affecting around 3.2 million agreements, and contractual ties between lenders and brokers covering roughly 2.9 million agreements. Only one of these conditions needs to be met for a valid car finance claim, provided the agreement falls within the eligibility period.

Agreements involving discretionary commission arrangements where consumers were not properly informed are considered among the most likely to result in a car finance refund or PCP refund.

Eligible agreements include finance used for cars, vans, motorbikes and campervans. The most common finance types covered are personal contract purchase and hire purchase, meaning motorists may be able to submit a PCP claim, multiple PCP claims, or broader car finance claims depending on their agreements.

Consumers are being warned that there is no clear way to determine whether they were affected by mis-sold car finance without submitting a car finance claim. Early car finance claims are expected to be processed more quickly, with many claimants potentially receiving payouts 2026, while those who delay may face longer waits into 2027.

Under the proposed scheme, once details are confirmed, there will be an implementation period of around three months, or longer for older agreements. Firms will then assess complaints and respond within a further three months with a decision on car finance compensation.

If an offer is accepted, payments are expected within one month, forming the basis of expected car finance refunds and PCP refunds. Average car finance compensation under the FCA-led scheme is estimated at around £700 per claim [4], although final payouts will vary depending on individual circumstances.

While the regulator-led route offers a simpler and more standardised process, some consumers may consider legal action [5]. Court claims could result in higher car finance refunds or a larger PCP refund, including full interest on agreements. However, this approach typically involves legal costs, which may account for 30% or more of any award, and a more complex process.

The regulator's strategy aims to give most people a faster and simpler route to redress. Millions more consumers will receive car finance compensation under the scheme than would have got compensation through individual legal claims.

New tools for a car finance refund check, some from a finance claims expert, are also helping motorists progress their PCP claims and car finance claims, including credit report services that allow users to identify historic agreements and lenders linked to potential car finance mis-selling.

The FCA is expected to confirm the full details in the coming days, so the next few weeks are crucial for consumers to get the ball rolling and gain earlier access to their car finance compensation payments as part of the wider car finance scandal.

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References:

1. Millions of motorists are being urged to submit a car finance claim ahead of an effective April deadline - https://www.dailypost.co.uk/news/motoring/motoring-news/martin-lewis-reminds-car-finance-33665357
2. The Financial Conduct Authority is expected to outline its final approach to the car finance scandal after markets close on March 30 - https://www.fca.org.uk/news/statements/timing-fca-motor-finance-announcement
3. The scheme could affect up to 14 million agreements across personal contract purchase and hire purchase deals taken out between April 6, 2007, and November 1, 2024 - https://www.fca.org.uk/news/press-releases/14m-unfair-motor-loans-compensation-proposed-scheme
4. Average car finance compensation under the FCA-led scheme is estimated at around £700 per claim - https://www.fca.org.uk/news/press-releases/14m-unfair-motor-loans-compensation-proposed-scheme
5. While the regulator-led route offers a simpler and more standardised process, some consumers may consider legal action - https://www.moneysavingexpert.com/site/listen-to--the-martin-lewis-podcast-/