Victims of mis-sold car finance may receive less than £950 per deal under a new compensation scheme proposed by the Financial Conduct Authority (FCA). The regulator expects to launch the scheme after consulting in October 2025, with the first payouts likely next year.
As reported in BBC News, the announcement follows the very significant recent Supreme Court ruling in the UK that hidden finance commissions on car loans were not unlawful in general, but could be unfair if commissions were excessively high. In one key case, the court ruled a 55% dealer commission was unfair and awarded the claimant the commission plus interest.
The size of the missold finance compensation scheme is significant – The FCA estimates the total industry cost of the scheme could reach £9–£18 billion. The scheme will likely cover finance agreements dating back to 2007, focusing on discretionary commission arrangements (DCAs) and undisclosed high commissions.
Key points:
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Likely payout: under £950 per deal
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Millions could be eligible
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Scheme consultation: October 2025
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Covers agreements from 2007 onwards
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FCA warns against using claims management companies due to fees
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Industry will fund compensation and administration costs
The FCA has confirmed those with existing complaints need take no further action. New claimants should contact their car finance provider directly.
FAQs About Mis-Sold Car Finance Compensation
What is mis-sold car finance?
It refers to car finance agreements where commissions to dealers were not properly disclosed, especially discretionary commission arrangements (DCAs) or excessively high commission rates that created unfair relationships.
How much compensation can I get?
The FCA expects average payouts to be less than £950 per deal, depending on the degree of harm.
Who is eligible?
Likely anyone with qualifying finance agreements dating back to 2007 that involved undisclosed DCAs or high commissions deemed unfair.
Do I need a claims company?
No. The FCA advises contacting your lender directly, as claims companies will take a percentage of any payout.
When will payouts start?
If the scheme is approved, first payments could be made in 2026 after the FCA’s consultation concludes.
