FCA car finance compensation scheme announced: how much you could get and what to do now

Millions of drivers due compensation after the Financial Conduct Authority confirmed a UK-wide car finance redress scheme affecting 12.1 million agreements. 

Millions of drivers are finally in line for payouts after the FCA confirmed a car finance compensation scheme, but many could still be left out-of-pocket.

The regulator has confirmed that widespread hidden commission practices meant that people were overcharged, with average payouts now confirmed to be £830 per agreement.

But changes to the proposed scheme mean 12.1 million agreements are now eligible for compensation, down from 14.2 million. And the overall bill for lenders has reduced from £11 billion to 9.1 billion.

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

“While compensation payouts for some have increased, it comes at the cost of millions of other drivers who are now excluded altogether.

“The FCA has narrowed who qualifies and reduced the overall bill for lenders, raising real concerns that many people who were overcharged will either miss out or receive less than they should.

“Millions of people were overcharged, and some were pushed into real financial difficulty. This was the regulator’s chance to put that right, but too many drivers will still be left out of pocket.”

Lenders have up to six months (for agreements since 2014) and eight months (for agreements between 2007 and 2014) to contact affected customers. And, importantly, lenders will only need to contact people who have complained or those they identify as being owed compensation.

To ensure your case is considered, we are urging people to act now if they haven’t already complained. Doing so means you’re less likely to be missed, especially if you’ve moved house or changed your details, and it could help you get your compensation sooner.

You can submit a complaint in minutes using our free tool, and sign up for alerts so you don’t miss any key updates as the scheme rolls out. 

Our research shows that most drivers want to use the scheme, but many would consider other options if the payout isn’t fair. It also shows that those hit the hardest by this scandal could face the biggest barriers to getting their money back.

Read on to find out what the new scheme means for you, and what to do next. 

What is the FCA car finance compensation scheme?

The FCA car finance compensation scheme is a nationwide programme designed to pay back drivers who were overcharged because of unfair or hidden commission arrangements in their car finance deals.

For years, many lenders allowed brokers and dealers to increase interest rates to earn more commission, often without telling customers. In other cases, commissions were excessively high or restricted consumer choice.

The Financial Conduct Authority now estimates that 12.1 million car finance agreements may have been affected. Lenders will now have to identify eligible customers and calculate compensation using a standard formula, with interest added on top.

Payments are expected to begin from 2026, but you don’t have to wait to complain.

Who are the winners and losers under the compensation scheme?

Millions of drivers will finally get money back, but not everyone who was overcharged will benefit.

Those in the most clearly unfair cases, where hidden commissions had the biggest impact, are set to receive full refunds of commission plus interest. Many others will get compensation without needing to go through the courts, which should mean faster and more straightforward payouts.

But fewer agreements are now covered than first expected, so some people who were caught up in this scandal won’t qualify at all. And even for those who do, compensation won’t always reflect what they actually lost, with payouts capped in around one in three cases.

Others may get nothing. That includes some people whose deals are judged “fair” under the scheme rules, or where firms argue there was no better deal available, even if commission was involved.

And even where compensation is paid, the interest added will be lower than what courts have typically awarded, and consumers won’t be able to challenge it, meaning some people may still be left out of pocket.

Do I need to complain now or wait to be contacted?

You don’t have to wait, and there are good reasons not to. Complaining now can help make sure you’re included and could mean you receive your compensation sooner.

Lenders will begin contacting customers later this year, but if your details have changed there’s a chance you could be missed. Submitting a complaint helps make sure your case is picked up.

Our research shows that many of the most financially stretched consumers are already at risk of being overlooked – whether because they’ve moved house, lost paperwork or don’t know who their lender was.

Even if you complained before and were rejected, it’s worth trying again. The FCA has said that 99% of complaints were previously turned down, so a fresh complaint could lead to a different outcome.

You can use our free tool to submit a complaint in just a few minutes.

How much car finance compensation could I get?

The FCA estimates average compensation of around £830 per agreement, but what you receive will depend on your individual case. Some people will get less, while others, particularly those with higher commission charges, could receive significantly more.

For older car finance deals taken out before 2014, payouts are likely to be lower overall. The FCA estimates an average payout of about £734 per agreement. But the midpoint is lower: around half of people are expected to receive less than £569, and half more.

For agreements taken out from April 2014 onwards, payouts are expected to be slightly higher. The FCA estimates an average award of about £881, with a midpoint payout of around £717.

Is compensation likely to be enough?

For many people, the answer may be no.

Compensation is based a standard formula rather than exact losses. It uses estimated overpayment and adds interest at the Bank of England base rate plus 1%. There is a minimum interest rate you can receive for any year of 3%. You will not be able to challenge the interest rate applied under the scheme.

The FCA has said this approach is designed to make the scheme quicker and more consistent. But it also means payouts may not fully reflect what you actually lost.

In many court cases, consumers are awarded 8% interest. That means some people could receive less through the FCA compensation scheme than they might through legal action. However, taking a claim to court can involve legal costs and fees.

Our research shows most drivers would rather use the scheme, but that only holds if it’s fair. If people feel short-changed, many say they would consider going to court to recover what they’re owed.

Is the compensation amount fair, and can I challenge it?

You don’t have to accept the first offer you’re given.

Many people understandably don’t trust lenders to get this right, and it’s your choice whether to accept the amount offered. You will be able to review how your compensation has been calculated and raise questions if something doesn’t look right.

That may be easier said that done but if something doesn’t look right you can take your case to the Financial Ombudsman Service. But, if you believe the interest applied doesn’t reflect your losses, you cannot challenge it.

In practice, if the calculation has followed the FCA rules, there may be limited scope to increase the amount through the Ombudsman.

Most people will likely choose to accept what they are offered. But if you think the payout doesn’t reflect what you lost, your alternative may be to consider taking your case to court.

What should I watch out for – are there scams?

Yes, and this is really important. We are already seeing scams and pressure tactics emerging and this is likely to get worse as the scheme rolls out.

Some of these are outright scams. Be cautious of unexpected calls, texts or emails offering “guaranteed compensation,” especially if they ask for upfront fees or personal or bank details. 

Others are firms looking to sign you up quickly and take a share of your compensation. Some people will want that support, especially if the process feels complicated, but it’s important to understand what you’re signing up for and how much it could cost you.

You don’t need to use a claims company or law firm to make a claim, as the scheme is designed to be free. But the choice is yours.

Regulators have now set up a joint task force to clamp down on poor practices, including misleading adverts, nuisance contact and unfair fees. Even so, it’s important to take your time before agreeing to anything.

Official payouts have not started yet. Legitimate lenders should not contact you out of the blue asking for sensitive information. You can check you are dealing with a genuine lender by using a new FCA motor finance scams helpline.

You can complain for free, so there’s no need to rush into any agreement. Take your time, check who you’re dealing with, and don’t feel pressured into signing anything.

How do I check if I’m eligible and make a claim?

If you’ve had car finance, particularly before 2021, there’s a strong chance you could be eligible.

The simplest way to get started is to submit a complaint to your lender so your case is logged and considered as part of the scheme.

You can use our free tool to check your eligibility and generate a complaint in minutes. The key thing is not to wait – taking action now helps make sure you don’t miss out. 

You can also read our full guide to car finance compensation for everything you need to know.

The content on this page was last updated on 31 March 2026