Car finance commission compensation: who is covered and where the scheme stands
Published · 5 min read · Figures checked . UK rules and rates change, so check the official sources below before you act.
The FCA has set up a redress scheme for people who bought a vehicle on finance between 2007 and 2024 without being told about certain commission arrangements. This guide explains who is covered, how to complain, and why payments are on hold.
What the scheme is and why it exists
When you buy a car on finance through a dealer, the dealer often acts as a broker, meaning it arranges the loan with a lender on your behalf. The lender can pay the broker commission for this. The Financial Conduct Authority (FCA), the UK regulator for lenders, found that in some cases people were not told about commission arrangements that could have affected what they paid. In response it published final rules for a motor finance redress scheme on 30 March 2026. The scheme tells lenders how to decide whether a customer was treated unfairly and how to calculate compensation, so that people do not have to prove it themselves. This guide is general information for people in the UK who have used finance to buy a vehicle. It is not advice on any individual agreement, and it does not cover leases.
Who is covered and who is not
Based on the FCA's consumer page, last updated on 13 October 2026, the scheme may cover finance used to buy a car, motorbike, van or campervan between 6 April 2007 and 1 November 2024, including hire purchase and Personal Contract Purchase (PCP), where the buyer pays in instalments and may pay a final sum to keep the vehicle. You are considered only if you were not told about at least one of three things: a discretionary commission arrangement (where the broker could influence the interest rate and so its own commission), a high commission arrangement, or a contractual tie between the broker and the lender. The FCA defines a high commission arrangement as commission of at least 39% of the total cost of credit and at least 10% of the loan. The FCA says around 12.1 million agreements, about 37% of the total, are eligible.
Some agreements are left out. Personal Contract Hire leases are not eligible, nor are business-purpose agreements, complaints already decided by the Financial Ombudsman Service or a court, or cases where compensation has already been accepted. Agreements are treated as fair if commission was £120 or less for agreements before 1 April 2014, or £150 or less from that date, or if no interest was charged. Very high-value loans are outside the scheme, although those customers can still complain in the usual way to their lender and then the Ombudsman. If you are a beneficiary of someone who has died, the FCA says you can complain on their behalf, and the lender is likely to ask for a will or grant of probate.
Where the scheme stands now
The scheme was challenged legally on 1 May 2026. On 2 July 2026 the Upper Tribunal suspended parts of it, on terms agreed between the FCA and the four challengers. In practice, the FCA says lenders do not have to calculate or pay compensation under the scheme until the legal process ends. The FCA's page says a hearing is set for 16 to 26 February 2027, with judgment expected in the following months. If the scheme is upheld and the judgment is not appealed, the FCA expects payments to begin in 2027. If it is overturned in whole or part, the FCA has said compensation could be delayed to 2028 or later, or it could instead direct lenders to resolve complaints one by one. Nobody can say today which outcome will happen, so these are the regulator's stated possibilities, not forecasts.
How to complain, and the dates to know
The FCA says you can complain to your lender for free, and that you do not need a claims management company or law firm. If you do not know who your lender was, the FCA suggests old bank statements, asking the dealer, or checking your credit file. Lenders that do not owe compensation should tell complainants. For agreements starting on or after 1 April 2014 where the complaint was made by 30 June 2026, the FCA says the lender should contact you by 18 November 2026. For earlier agreements, where the complaint was made by 31 August 2026, the date is 18 January 2027. Later complaints should get a reply within 5 months. People who are not contacted by their lender can still complain to it by 31 August 2027. After the lender replies, you have one month to accept or challenge, and if you accept, the lender has one month to pay.
A worked example
These figures are illustrative only. The FCA estimates average redress of £829 per agreement, but your own figure could be higher, lower or nil. The FCA also says claims management companies and law firms can charge up to 36% including VAT of any compensation (30% plus 20% VAT). For example, if someone were awarded £829 and used a firm charging 36%, the fee would be £829 x 0.36, which is £298.44, leaving £530.56. Complaining directly to the lender costs nothing, so the full £829 would be kept. As a check on the scale of the scheme, 12.1 million agreements at £829 comes to about £10.0 billion, which matches the FCA's figure of £10 billion if everyone claimed. The FCA's headline redress of £7.5 billion assumes that 75% of people take part, and 75% of £10.0 billion is about £7.5 billion.
Common mistakes and where to get free help
Many people find it helpful to avoid signing with more than one claims firm, because the FCA warns against this and says any fee for ending an agreement should be reasonable and reflect work done. It can also be worth checking that a firm is authorised. Be careful about sharing bank details: the FCA says lenders may ask for them, but you should only share them if you are sure who you are dealing with, and never share PINs or passwords. If you are unhappy with a lender's decision, ask for a redress determination, a formal decision under the scheme, and then you can complain to the Financial Ombudsman Service, which is free. The Ombudsman says it can look at your case only once you have that determination or the deadline has passed, so many people note the date in the lender's letter. If you are worried about debt, MoneyHelper and Citizens Advice offer free guidance.
Check before you act
This scheme is subject to a legal challenge and dates may change. Please confirm the current position on the official pages linked below before relying on anything here.
Sources
For information only. See our disclaimer and editorial standards. Spotted an error? Tell us.
