Car finance compensation

Car finance compensation 2026: check what you’re owed and complain for free

Last updated on 10 September 2026

In this guide…

Latest on car finance compensation

Millions of drivers are owed compensation for car finance mis-selling, but the scheme designed to put things right risks leaving people short-changed. That’s why Consumer Voice is taking action.

We launched a legal challenge to the FCA’s motor finance compensation scheme over how payouts are calculated. We support a nationwide redress scheme as the best way to return money to millions of drivers, but the compensation needs to be fair and properly reflect what people lost.

We have now submitted our detailed Reply to the FCA’s defence of the scheme. This is our formal response setting out why we believe the regulator has not answered our concerns that its payout rules could systematically undercompensate millions of consumers. Our full Reply will be published by the FCA on 1 September.

Three lenders – Volkswagen Financial Services, Mercedes-Benz Financial Services and Crédit Agricole Auto Finance – are also challenging the scheme, seeking to exclude or limit compensation. Consumer Voice is the only applicant arguing that drivers could be paid too little.

Parts of the scheme relating to calculating and paying compensation are currently paused while the legal challenges are decided. Lenders must still continue the work needed to prepare, including identifying relevant complaints and agreements. Our action is about fixing the scheme, not stopping compensation.

The case is due to be heard by the Upper Tribunal in December 2026 or February 2027. We’ll continue to explain what the challenge means for drivers as it progresses.

Nothing about our challenge changes what you should do now. If you had car finance between 2007 and 2024, you could be eligible for compensation. If you have not already complained, you can use our free tool to take action.

Sign up for updates

We’ll keep you updated on the FCA scheme and our action to secure fair compensation.

In this guide…

Why your car finance deal may have been unfair

For years, many drivers were charged more because of hidden commission arrangements that rewarded brokers for increasing interest rates. Most people were never clearly told this was happening.

Only 22% of consumers in our research recall commission being properly explained.

You could have been mis-sold if you weren’t told about:

  • Commission that increased your interest rate
  • High commission built into your deal
  • Limited choice because of lender-dealer relationships

These practices broke FCA rules and the law. Courts have confirmed how serious this was. In December 2024, the High Court backed action on hidden discretionary commission. In August 2025, the Supreme Court confirmed failures to disclose both high commission and broker ties were unlawful.

Put simply, many people paid more than they should have, without ever knowing why.

The reality: not everyone will get what they lost

The FCA says millions will receive compensation. But many people will receive less than they actually lost.

Some people will get nothing at all, even if commission was involved. Others will receive a few hundred pounds, particularly for older agreements. In around one in three cases, compensation will be reduced by caps.

How the car finance compensation scheme will work

The scheme will cover agreements taken out between 6 April 2007 and 1 November 2024.

There will be a delay while lenders prepare:

  • Agreements from April 2014: scheme starts 30 June 2026
  • Agreements before April 2014: scheme starts 31 August 2026.

If you complain before the scheme starts, your case is more likely to be processed sooner. Or, if you don’t complain, lenders should contact you within 6 months of launch. If you’ve already complained, you don’t need to do anything.

You will have one month to accept or challenge any decision you receive on compensation. And you can go to the Financial Ombudsman Service if you continue to disagree.

You will not be able to challenge the interest rate applied under the scheme. Interest is calculated using a set formula, even if it doesn’t reflect your individual situation.

The FCA says this will be simpler than going to court, but it may not deliver full compensation in most cases. Our research shows many people would be prepared to go to court if they felt the scheme didn’t deliver fair compensation.

Check what you could be owed

If you’ve had car finance, the most important step you can take now is to act. Use our free tool to check what you could be owed under the FCA current compensation scheme.

Check what you could be owed

How much car finance compensation you could get

Most people will receive compensation based on two things:

  1. How much extra they were charged, and
  2. The commission included in their deal

The FCA has asked lenders to work this out by estimating how much interest you overpaid.

  • For agreements from April 2014, this is based on a 17% reduction in the interest rate.
  • For older agreements, it’s based on a 21% reduction.

This gives you an estimate of what you overpaid. That figure is then averaged with the commission paid, and interest is added on top to produce your final compensation.

Interest will be calculated at the Bank of England base rate plus 1%, with a minimum of 3% per year.

For example, if your estimated overpayment was £500 and the commission was £900, the average would be £700. Interest is then added using simple interest. Depending on when your agreement started, this could increase the total to somewhere around £720.

In a small number of more serious cases, you could receive all the commission back, plus interest. But most cases won’t fall into this category.

Compensation will be capped in around 1 in 3 cases. This means your compensation will be reduced if it exceeds certain limits (like the cost of credit). You may get nothing if your interest rate was already very low.

What you need to do now

If you had car finance between 2007 and 2024, you could be owed car finance compensation. Don’t wait to be contacted.

Start by submitting a complaint to your lender. This helps make sure your case is considered and could mean you receive compensation sooner.

If your complaint was rejected before, it’s worth trying again. The rules have changed and your outcome could be different.

You can complain yourself using our free tool. Some people may choose to use a law firm for support, but it’s important to understand the costs before signing up.

Get your car finance compensation letter

Check your eligibility and complain directly to your lender using our free template letters.

How to find your car finance lender

You’re not alone if you can’t remember who your lender was. Many people took out agreements years ago and no longer have the details to hand. There are a few simple things you can do to track it down.

  1. Start with old paperwork or bank statements. The finance agreement, old emails or regular payments could reveal the name of your lender.
  2. Check your credit report. You can check for free with Experian, Equifax or TransUnion.
  3. Contact your dealership. They may still have records of which lenders they worked with at the time.

The FCA also provides information on how to find your lender, including links to firms.

You can still complain even if you don’t have all the details. Lenders are expected to help identify your agreement.

Watch out: car finance compensation scams are already appearing

Scammers are already targeting drivers by pretending to offer compensation.

No official payouts have started yet, and lenders won’t contact you out of the blue asking for sensitive information. So be cautious of unexpected calls, texts or emails about compensation.

Never share your bank details, PINs or passwords with anyone who contacts you.

If you are unsure, contact your lender using the details on its official website. You can also check the FCA website to confirm the firm is genuine.

Car finance compensation FAQs

What actually happened, and why are millions being paid?

For years, many car finance deals included hidden commission arrangements between lenders and brokers. In some cases, brokers increased interest rates to earn more commission without telling customers. The FCA has said about 12.1 million agreements may have been mis-sold this way. That is why a nationwide compensation scheme is now being introduced.

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

You don’t have to wait to be contacted. Lenders are currently expected to start contacting customers from 30 June 2026, but not everyone may be reached. Complaining now helps ensure your case is reviewed. It may help you get compensation sooner, especially if your details changed.

How much car finance compensation could I get?

The FCA estimates average compensation of around £830, but many people will receive less. Compensation is based on a standard formula that may underestimate what you actually lost. That is why we are challenging the scheme.

Can I trust the amount I’m offered?

You don’t have to accept an offer without question. You can review and challenge how your compensation has been calculated. But you won’t be able to challenge the interest rate applied under the scheme, even if it doesn’t reflect what you lost. If you’re not happy with the response to any challenge, you can take your case to the Financial Ombudsman Service, although there may be limited scope to increase the amount.

Is there anything I need to watch out for?

Yes. Scammers and high-pressure tactics are already emerging. Be cautious of unexpected calls, texts or emails offering compensation, requests for upfront fees, or pressure to sign quickly. You don’t need to pay to make a claim, and you can check firms using the FCA website before sharing any information.

About Consumer Voice

Consumer Voice helps people get back money they may be owed when companies get it wrong. We explain your rights clearly, so you can understand whether you may be owed compensation, whether you can join a claim, and what steps to take next.