Car finance scandal: those hit hardest risk losing out again

Millions were overcharged through hidden commissions. Now, the people who suffered most face the biggest barriers to getting their money back.

Later today, the Financial Conduct Authority will set out the details of a UK-wide compensation scheme for car finance mis-selling. It is a moment millions of drivers have been waiting for. 

But as the regulator prepares to act, our latest research shows that the people who were hit hardest by this scandal are the ones most at risk of being left behind again.

For years, car finance deals included hidden commissions paid by lenders to dealers. In some cases, those commissions directly increased the interest rate people paid. Most drivers have said they were never told. 

What looked like an affordable monthly payment often came at a much higher cost than it should have. For many, that meant paying more than they needed to. For others, it meant missing bills, borrowing from family, or falling behind on payments altogether.

“Stress and sleepless nights… how do you get out of the black hole that just keeps getting bigger and bigger because you pay these payments you can’t afford.”

That is how one person described their experience. It is not an isolated story.

The FCA scheme must work for the people who need it most. Otherwise the same consumers who were disadvantaged in the first place will lose out again.

Alex Neill, co-founder of Consumer Voice, said:

“Drivers have waited long enough for justice and won’t accept a redress scheme that papers over the cracks. People were charged more than they should have been, and many were pushed into real financial difficulty. 

“The FCA must deliver a scheme that fairly compensates consumers – not one that leaves them out of pocket again.”

Think you could be owed money? Act now.

Millions of drivers could be due compensation for mis-sold car finance. The most important step you can take today is to complain to your lender. 

If you’ve already complained, your case is likely to be dealt with faster when the FCA scheme opens. We’ll also keep you updated every step of the way.

Who was most affected by mis-sold car finance

Our research, based on a survey of more than 2,000 people who took out car finance between 2007 and 2024, identifies a group we describe as vulnerable consumers. These are people with household incomes below £30,000 who say their car finance caused them financial harm.

They make up more than one in 10 (11%) of those we surveyed. 

The impact on this group is stark.

• 43% struggled to pay bills because of their car finance, more than double the rate for the wider public (19%).
• 40% said it caused stress or worry, compared to 23% overall.
• 22% borrowed from family or friends to cope, against 10% of the general public.
• 21% took on extra credit just to get by, compared to 13%.

This is not simply about overpaying. It is about people being pushed into financial difficulty. The picture is even more severe among people who turned to legal support. In a separate survey of more than 28,000 people who had signed up with one law firm, 54% of vulnerable consumers had struggled to pay bills, 43% reported stress or worry, and 1 in 10 fell behind on their car finance payments altogether.

We also spoke in depth with 24 vulnerable consumers, both members of the general public and people who have signed up with a law firm, to understand what sits behind the numbers.

“It had an impact on everything else in life… that meant I didn’t have enough money for food. We weren’t able to pay some of the bills and therefore we got a bad credit report… it’s like there is no way out,” said one member of the general public.

Another who had missed payments, said: “They were like sending letters saying we can go down the legal route if you don’t pay, so I had to kind of redistribute my finances to pay it off. It was bad because I was then neglecting another loan I had, so they started chasing me.”

Why some drivers risk missing out on car finance compensation

Knowing you might be owed money is the first step to getting it. But too many vulnerable consumers have not even reached that point.

Around 70% had heard about potential compensation before taking part in our research, compared to 79% of the public overall. And awareness of the FCA’s proposed scheme was lower still, at just 52% compared to 65%.

But this is about more than just awareness. It is understanding. Many people told us they had heard about the scandal but did not really know what it meant or whether it applied to them. Few understood that the issue centred on dealer commission.

“One thing I wanted to ask, and sorry if it sounds a stupid question, what exactly is the scandal? What have they misled?”

This is a problem because eligibility may depend on technical definitions that are difficult to interpret. Only 34% of vulnerable consumers said they would find it easy to work out for themselves whether they qualified, compared to 41% overall. Among those who had signed up with a law firm, just 13% found it easy and 41% said it would be difficult.

There are practical barriers too. Nearly seven in ten 68% of vulnerable consumers cannot remember the name of their lender. More than half do not have their paperwork or are unsure if they do. More than a third have moved or changed contact details. This could mean some people will not be contacted at all.

What drivers don’t trust the car finance compensation process 

For many people, the process of trying to get compensation for mis-sold car finance has become part of the problem. 

Cold calls, online adverts collecting personal data and long periods of silence after making a complaint have left people feeling wary and overwhelmed.

“Honestly, it feels like being sold the car all over again – too many people after your business, none of it feels honest.”

Some do not even know whether they have formally complained.

“It’s not clear to me whether I have complained or not, because I’ve made an inquiry, but I didn’t go further.”

That confusion is important. People who have already complained are likely to be prioritised when the scheme opens, but many don’t know where they stand.

Confidence is another major barrier. Only 14% of vulnerable consumers strongly agree they feel confident managing their money, compared to 28% of the general public. Just 10% strongly agree they are knowledgeable about financial matters, versus 18% overall.

This is not a personal failing. It reflects how car finance was sold. Deals were often rushed. The focus was on monthly payments rather than the total cost. The role of commission was not properly explained.

“All I was asked was ‘what do you think you can afford a month?’ We can give you a yes or no… sign on the dotted line. And that was it. It wasn’t interest rates, T’s & C’s, that came after,” said one person.

Another said: “It was a bit rushed… I just remember coming away thinking that didn’t feel right.”

Another said: “He said we can get a really good deal with our finances, better than you’d get with your bank.”

Why many drivers are using law firms to claim compensation

Many vulnerable consumers are turning to law firms and claims companies because they feel they have little alternative.

Among those who had already taken steps to claim, 58% of vulnerable consumers used a claims company, compared to 46% overall. Only 19% went directly to their lender, compared to 42% of the general public.

“I’m not personally going to go and do it… someone else has got to do it, because it’s too hard for me.”

“They’ve got more clout than the individual. If you’re doing it on your own, they can drag it on and drag it on, knowing that you might in the end just give up.”

Looking ahead to the FCA scheme, 45% of vulnerable consumers say they want the option to use a law firm, compared to 38% overall. Just 36% would feel comfortable going through the process without any legal help.

Darren Smith, Managing Director at Courmacs Legal, a law firm based in Blackburn that is dealing with 4 million car finance claims, said:

“What we see among our clients mirrors exactly what Consumer Voice’s wider research shows. Vulnerable people don’t turn to law firms because they want to, they do it because the alternative feels impossible. 

“They distrust lenders, they don’t understand the process, and many of them are still dealing with the financial fallout of being mis-sold in the first place. The FCA needs to wake up to that reality.”

Trust in lenders is extremely low. Just 7% of vulnerable consumers completely trust lenders to follow the rules when calculating compensation, compared to 14% of the public. Just 5% say they trust lenders to provide clear and impartial information, compared with 7% overall.

“So the people we’re complaining about are the ones who are going to say whether you’re eligible or not? Basically marking their own homework.” 

Many told us they would accept whatever they were offered, even if they suspected it might not be right.

“Well, I probably would just accept what they give me, because I wouldn’t know if it’s right or wrong.”

Case study: David, 37, Derbyshire

David lives alone in rented accommodation in Derbyshire and works in operations. He has been feeling the financial strain of rising costs since Covid.

He has taken out two car finance agreements. The first time, he felt completely in the dark. “I felt like when they explained the car finance to me, it was kind of a bit of a rush job, and I didn’t really know what I was signing up for.”

Things unravelled quickly. When a large payment came due, he did not have enough. He missed payments and began receiving threatening letters.

To keep up with the car finance, he stopped paying another loan. “I had to redistribute my finances to pay it off, which was bad, because I was then neglecting another loan I had. So then they started chasing me… I just managed to survive it all.”

Despite being aware that redress is available, David has not made a claim. He is unsure whether communications he has received are legitimate and does not know if it is worth the effort. “I don’t know if I’m even guaranteed the money. So it could be time and effort for nothing.”

He is also sceptical that lenders will proactively contact him. “I think you’d have to do the legwork to get them to do anything… I think it’s farfetched to wait for them.”

Case study: Nina, 51, Gateshead

Nina is a single mum working in recruitment. She has used car finance for nearly 25 years.

At times, her credit score was low, and getting approved was her main priority. “I was more driven by just thinking, can I get approved.”

She has experience of financial redress, having previously used a claims company to reclaim bank charges. The fees were significant. “Once they get their claws in, you’re signed up.”

For car finance, she has received messages asking her to enter her registration details but ignored them. She does not trust cold contact.

What she wants is a middle ground. “If there was a government scheme, with a nominal fee… to have an option of someone to help you at a reasonable, ethical fee.”

Will the FCA car finance compensation scheme go far enough

The FCA now has an opportunity to put things right. But we are concerned about whether the proposed scheme will go far enough.

The suggested approach to calculating compensation risks underestimating the level of harm. The proposed interest rate, based on the Bank of England base rate plus 1%, is significantly lower than the 8% typically applied in similar court cases.

One law firm, Bott & Co, has also raised concerns that the scheme could exclude some borrowers who paid more overall.

If the FCA fails to respond to these concerns it will be another blow for people, especially those who struggled to pay bills, borrowed money or took on additional debt.

Our research

Consumer Voice surveyed 2,021 members of the public who had taken out a car finance agreement between 2007 and 2024. Just over one in ten respondents (11%) were classified as vulnerable, defined as having a household income of less than £30,000 and having suffered financial harm because of their car finance agreement. Just over half had taken out at least one agreement during 2007-2021, the key period under review. Fieldwork took place online between 27 October and 9 November 2025.

Additional data was drawn from a Consumer Voice survey of 28,201 clients of Courmacs Legal who had sought assistance with car finance claims. Of these, 5,943 were classified as vulnerable, defined as having a household income under £30,000 and having experienced financial strain as a result of their car finance costs. Fieldwork took place online between 11 and 27 October 2025.

In-depth qualitative research was conducted with 24 vulnerable consumers, including both Courmacs Legal clients and members of the public. All participants had household incomes below £40,000 and had taken out at least one car finance agreement between 2007 and 2021, and claimed to have suffered in some way as a result of taking out car finance. Fieldwork took place online between 3 and 12 March 2026.