Britons who suspect they were misled about car finance from 2007 to 2024 might qualify for an average compensation of around £1,400 per client. A proposed compensation program by the Financial Conduct Authority (FCA) could see car purchasers receiving over £8 billion in payouts. The FCA stated that financial divisions of banks and automakers could shell out billions to reimburse certain car buyers affected by undisclosed commissions between April 2007 and November 2024. These buyers were not fully informed about the commissions paid to brokers, typically car dealers.
The anticipated total includes £8.2 billion in compensation. If you think you may have been affected by mis-sold car finance during that timeframe, you can reach out to Locksley Law for a complimentary, no-obligation agreement check.
Financial institutions are gearing up for substantial payouts, with Close Brothers reserving £165 million and Santander £295 million. Lloyds, the largest car finance provider through its Black Horse brand, has set aside £1.95 billion. Carmakers like Mercedes-Benz and BMW have also allocated over £500 million each.
In light of the potentially significant payouts, we’ve addressed some common concerns you might have. The car finance scandal came to light after it was revealed that some lenders were paying undisclosed “secret” commissions to dealerships. This enabled dealers to set interest rates on finance agreements, with higher rates leading to larger commissions. Consequently, many customers may have agreed to finance deals with inflated interest charges.
An investigation by the FCA revealed that 44% of car finance agreements sold between April 2007 and November 2024 could be considered unfair due to insufficient disclosure. The regulator stated that “Motor finance companies violated laws and regulations by failing to disclose crucial information at the time, resulting in unfairness where consumers were deprived of the opportunity to negotiate or secure a better deal, and in some cases, paid more for their loan.”
A ruling by the Court of Appeal in 2024 raised the specter of significant compensation obligations for lenders, with potential costs estimated at up to £44 billion by some industry sources. However, most of that judgment was overturned by the Supreme Court in August of the following year, substantially reducing the liability for lenders.
Following this ruling, the FCA is now expected to establish the parameters of a planned redress scheme. Under the proposed FCA redress scheme, lenders could be mandated to pay out £8.2 billion, with some projections reaching as high as £11 billion. Affected customers may receive an average compensation of approximately £700 per claim.
Since its inception in October 2025, Locksley Law customers have filed more than two claims on average. As per the FCA statement, each claim could yield up to £700, translating to an average client potentially receiving a payout of up to £1,400.
Individuals who believe they were misled with a car finance agreement between April 2007 and November 2024 may be eligible to make a claim, including those with Hire Purchase (HP) and Personal Contract Purchase (PCP) agreements falling into specific categories.
If you suspect you were mis-sold car finance, the FCA is proposing a voluntary redress scheme anticipated to be launched in 2026. Participation in the scheme is not obligatory, and consumers retain the option to pursue legal recourse through the courts. There is no obligation to file a claim through a law firm or claims management company.
If you had a PCP or HP agreement between 2007 and 2024, you can contact Locksley Law for a complimentary agreement check to determine if you might be owed an average compensation of £700. Visit www.locksleylaw.co.uk for further information.
For those opting to use the FCA scheme, the regulator offers a template letter on its website for individuals who believe they were affected. The FCA website provides guidance for those who feel their car, motorbike, or van finance agreement was mis-sold during the relevant period. Once the scheme is operational, lenders will reach out to eligible customers with next steps.