Updated: 11 August 2026
Originally Published: 11 March 2025
Quick Answer
If you're here looking for what is the Close Brothers scandal, you're likely wanting to know whether your car finance agreement could be impacted and whether you may be entitled to compensation.
The Close Brothers scandal is part of a wider scandal in the UK around car finance where commission arrangements on some motor finance agreements have been called into question. Since then the Financial Conduct Authority (FCA) has proposed an industry wide compensation scheme with eligible motorists likely to receive an average of around £829 [1], although the amount will vary depending on the individual agreement.
While compensation payments have been delayed by ongoing legal challenges, motorists can still begin a car finance refund check or a PCP claim check and find out whether they may have an eligible Close Brothers compensation claim.
Close Brothers Scandal at a Glance
- What is the Close Brothers scandal?: Concerns that some car finance agreements involved commission arrangements that were not fully disclosed to customers, potentially increasing the cost of borrowing.
- Who could be affected?: Drivers with eligible personal-use car finance agreements taken out between 6 April 2007 and 1 November 2024.
- Average FCA compensation: Around £829 per eligible agreement across the proposed FCA scheme.
- Close Brothers provision: Close Brothers has set aside more than £300 million to cover potential motor finance compensation [2].
- Current position: The FCA's compensation scheme remains subject to legal challenges, but motorists can still submit car finance claims.
- When could payments begin?: The original payouts 2026 timetable has been delayed, with payments now widely expected during 2027, subject to the outcome of the Upper Tribunal proceedings.
- Proposed FCA deadline: 31 August 2027
Introduction
The phrase "Close Brothers scandal" has appeared repeatedly in headlines over the past few years, leaving many motorists wondering what it actually means and whether it could affect them.
For some, it's simply a news story. For others, it could relate to a finance agreement they signed years ago without giving much thought to how it was arranged.
Close Brothers has become one of the lenders most closely associated with the UK's car finance scandal after concerns were raised about commission arrangements used in some dealership finance agreements. Those concerns led to regulatory investigations, landmark court cases and, ultimately, the FCA's proposed compensation scheme covering millions of motor finance agreements across the UK.
The legal background is important, but for most motorists the key questions are much simpler.
Was my agreement affected? Could I receive compensation? And when might payments begin?
This guide explains what the Close Brothers scandal is, why the lender has become such a significant part of the wider car finance mis-selling investigation, how Close Brothers compensation claims are assessed and what the latest FCA developments mean for motorists considering a claim.
If you're unsure whether your agreement could qualify under the FCA's proposed scheme, our guide to Close Brothers Finance Claims explains the eligibility criteria, the FCA's proposed redress scheme and the latest legal developments in more detail.
What Is the Close Brothers Scandal?
The Close Brothers scandal refers to concerns about the way some car finance agreements were arranged through dealerships, particularly where commission arrangements may have influenced the overall cost of borrowing without customers fully understanding how those commissions worked.
Like many lenders, Close Brothers worked with motor dealerships to offer finance to customers buying a vehicle. In some cases, dealers received commission from the lender for arranging the finance. The FCA later investigated whether certain commission arrangements were sufficiently transparent and whether they resulted in some consumers paying more than they otherwise would have.
Close Brothers is not the only major lender to have been dragged into the broader car finance scandal that has led to regulatory action across the sector. But it has been singled out for criticism by the ombudsman because of its role in the test case litigation that helped create the current claims climate.
It's important to remember that the existence of the scandal doesn't mean every customer was affected or that every agreement was mis-sold. Instead, each Close Brothers car finance claim is assessed individually under the FCA's proposed compensation scheme to determine whether the customer may have suffered a financial loss.
Understanding what happened helps explain why Close Brothers has become one of the most closely watched lenders in the wider car finance investigation and why so many motorists are now exploring whether they could be entitled to compensation.
Why Is Close Brothers at the Centre of the Car Finance Scandal?
Close Brothers has become one of the most recognisable names linked to the FCA car finance investigation, not only because it provided finance through dealership networks but also because it played a prominent role in the legal challenges that have shaped how compensation is being handled today.
The lender was involved in the landmark Hopcraft v Close Brothers case, one of three appeals considered by the Supreme Court [3]. Although the judgment clarified important aspects of the law surrounding commission disclosure, it didn't bring the wider issue to an end. Instead, attention shifted towards the FCA's proposed redress scheme, which is intended to provide a consistent way of assessing eligible agreements across the industry.
Close Brothers has also publicly recognised the potential financial impact of the compensation scheme by increasing the amount it has set aside for possible payouts. That has helped reinforce its position as one of the lenders most closely associated with the ongoing car finance mis-selling investigation.
How Much Compensation Could You Receive?
One of the biggest questions motorists ask after learning about the Close Brothers scandal is how much they could actually receive if their agreement qualifies for compensation.
The honest answer is that there isn't a standard payment for every successful Close Brothers compensation claim.
Instead, the FCA's proposed redress scheme looks at each agreement individually. Rather than applying a fixed refund, it considers whether the customer paid more than they should have because of the way their finance agreement was arranged.
Several factors may influence the amount of car finance compensation, including:
- the amount borrowed
- the length of the agreement
- the interest charged
- how commission affected the overall cost of borrowing
- the financial impact on the customer
This means two motorists who financed similar vehicles through Close Brothers could receive very different outcomes.
If a claim is successful, compensation may include a refund of excess interest or commission, together with any interest added under the FCA's proposed compensation scheme.
It should also be noted that the FCA's figure of approximately £829 is an average across all eligible lenders and agreements. Some successful Close Brothers car finance claims or PCP car claims may be lower, some may be significantly higher, depending on individual circumstances.
How Much Has Close Brothers Set Aside for Compensation?
One of the reasons Close Brothers has remained at the centre of the car finance scandal is the amount it has set aside to deal with potential compensation.
The lender has put aside more than £300 million for potential claims from Close Brothers customers as part of its efforts to estimate how much the Financial Conduct Authority’s proposed redress scheme may cost its business.
The bank making a provision does not mean that all of its customers will be compensated, or that they have already been pre-approved. It is an accounting exercise which allows the lender to set aside the likely cost of undertaking redress reviews, and of compensating customers if required.
Although accounting provisions don't predict how much any individual customer will receive, they give an indication of the potential scale of claims the lender expects to review. Close Brothers has publicly acknowledged that a substantial number of agreements may need to be assessed as part of the FCA's proposed compensation scheme.
Even so, every Close Brothers car finance claim will continue to be reviewed on its own merits. Whether you receive car finance compensation, and how much you could receive, will depend on your individual agreement rather than the amount the lender has set aside.
Do PCP Agreements Receive Higher Compensation?
Many motorists looking into PCP claims assume that having a Personal Contract Purchase agreement automatically means they'll receive a larger payout.
The thing is that’s not how the FCA’s proposed compensation scheme would operate in practice.
There is no different compensation scale for PCP finance claims. The same principles apply regardless if your agreement was a PCP agreement or a Hire Purchase Agreement.
Nonetheless, many PCP car finance agreements are typically for larger borrowing over a longer period of time with a final balloon payment. This can mean that some individual agreements can end up having a higher financial impact for this reason can potentially attract a higher PCP refund than some short term agreements.
However, this isn't guaranteed. Every PCP compensation claim is assessed individually, and the outcome will depend on the specific details of the agreement rather than the finance product alone.
If you're unsure whether your agreement was PCP or Hire Purchase, don't let that stop you exploring your options. Many motorists no longer have their original paperwork, but if you are searching online on "how to find my car finance agreements," you may still be able to do so through lender records, your credit report or by completing a car finance refund check.
If you've had several vehicles over the years and aren't sure where to start, our guide on How to Claim Against Close Brothers Finance explains how to find old car finance agreements and the different ways you can begin the claims process.
When Will Close Brothers Pay Compensation?
Many motorists searching for Close Brothers claim back or Close Brothers compensation claims want to know one thing: when will compensation actually be paid?
At the moment, there isn't a confirmed payment date for all eligible customers.
Although the FCA published its final motor finance compensation scheme earlier this year, several lenders, including Close Brothers, have challenged parts of the proposed redress scheme through the Upper Tribunal. As a result, implementation of the scheme has been partially suspended while those legal proceedings continue [4].
This indicates that the previous timeline for payouts to start in 2026 is not expected to be met. Compensation payments are now generally expected to commence in 2027. However, the exact timing will be dependent on the outcome of the Tribunal proceedings and any additional announcements from the FCA.
The hold-up is on the FCA's wider car finance compensation scheme, not just Close Brothers. It's a pain for motorists who want the matter resolved fast, but the FCA has said that preparation of the scheme is ongoing during the legal process.
Should You Wait Before Making a Claim?
For most motorists, the answer is no.
Although compensation payments have been delayed, you don't need to wait for the legal process to finish before checking whether your agreement may qualify.
Starting a car finance refund check now can help establish whether your agreement falls within the scope of the FCA's proposed redress scheme. It can also make it easier to find old car finance agreements, particularly if your finance was arranged several years ago or you've changed vehicles since then.
If you're wondering how to find old car finance agreements, you may be able to locate them through:
- old finance paperwork
- email confirmations from the lender or dealership
- bank statements showing monthly payments
- your credit report
- the lender directly
If you no longer have this information, don't worry. Many motorists are in the same position, particularly if their agreement ended years ago. Historic agreements can often still be traced using basic personal details as part of a car finance refund check.
If you're ready to explore your options, our guide to How to Claim Against Close Brothers Finance explains the claims process, what information you'll need and the different ways you can submit a claim.
Frequently Asked Questions
What is the Close Brothers scandal?
The Close Brothers scandal or the car dealer commission scandal relates to questions over how certain car finance deals are sold through dealers, and whether commissions paid on those deals are always made clear to customers. This was one part of the UK car finance scandal and resulted in an FCA investigation, with proposals for an industry wide compensation scheme.
How much compensation could I receive?
The FCA estimates that eligible motorists could receive around £829 on average, but this is only an average across the proposed scheme. Your Close Brothers compensation claim will depend on the individual circumstances of your agreement.
Can I make a Close Brothers car finance claim if I've already paid off my finance?
Yes, you might be able to. You don’t have to have an open agreement to make a Close Brothers car finance claim. If your finance agreement is within the FCA’s proposed eligibility criteria you can still be eligible for compensation even if you’ve repaid the finance or don’t own the vehicle anymore.
Will all PCP claims be compensated?
No. Just because you have PCP car finance, does not mean that you will automatically be entitled to receive a PCP car claim compensation.
Every individual PCP claim will be looked at separately and on a case-by-case basis. The FCA’s proposed redress scheme will take into account how the agreement was put together, and whether it falls within the terms of their investigation.
When will Close Brothers begin to pay compensation?
At present there is no confirmed date when all eligible customers will begin to receive payment.
The original payments 2026 timetable has been put back due to the Upper Tribunal hearing legal challenges to the FCA's proposed compensation scheme. Payments are now widely expected in 2027, depending on the outcome of those proceedings.
Can I still check if I'm eligible?
Yes. Even though compensation payments have been delayed, you can still complete a car finance refund check to establish whether your agreement may qualify under the FCA's proposed scheme.
What This Means for You
The Close Brothers scandal has become one of the defining stories in the UK's wider car finance scandal, helping to shape both the legal debate and the FCA's proposed compensation scheme.
While not every agreement will qualify for compensation, millions of motorists could be affected by the outcome of the FCA's review. The amount you may receive will depend on your individual agreement, and although compensation payments have been delayed by ongoing legal challenges, claims can still be started.
If you think you may have been affected by mis-sold car finance, or specifically, a mis-sold PCP car finance, carrying out a car finance refund check is often the simplest place to begin. It can help establish whether your agreement may qualify and give you a clearer understanding of your options while the FCA's proposed scheme continues to progress.
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References:
- the Financial Conduct Authority (FCA) has proposed an industry wide compensation scheme with eligible motorists likely to receive an average of around £829 - https://www.fca.org.uk/publication/policy/ps26-3.pdf
- Close Brothers has set aside more than £300 million to cover potential motor finance compensation - https://elmwoodlaw.com/news/close-brothers-raises-motor-finance-provision-320m-mis-selling-costs-mount/
- The lender was involved in the landmark Hopcraft v Close Brothers case, one of three appeals considered by the Supreme Court - https://supremecourt.uk/uploads/uksc_2024_0157_0158_0159_judgment_2bb00f4f49.pdf
- implementation of the scheme has been partially suspended while those legal proceedings continue - https://www.fca.org.uk/news/statements/motor-finance-scheme-partially-suspended