Car finance payout figure confirmed for Brits who bought vehicles between key dates

Millions of Brits might be owed an increased payout in the wake of a major announcement into the car finance mis-selling scandal, it was announced last night.

Compensation is expected to be paid on more than 12 million car finance agreements mis-sold between 2007 and 2024. Although the Financial Conduct Authority (FCA) said the number was fewer than originally proposed, the average payout has increased to around £829 per agreement.

According to Locksley Law, Brits who suspect they were mis-sold car finance between 2007 and 2024 may be eligible for compensation averaging far more than this. The law firm puts the figure at £1,658 per customer**.

The regulator estimated that the finance arms of banks and carmakers could pay out billions to compensate motorists impacted by undisclosed commissions between April 2007 and November 2024. Such buyers were not fully informed about the commission lenders paid to brokers, who were typically car dealers.

The projected figure includes £7.5 billion* in compensation. If you believe you may be amongst those mis-sold car finance during that period, you can get in touch with Locksley Law to carry out a free, no-obligation agreement check.

Given the potentially enormous scale of these payouts, we've addressed the key questions you may have.

What is the car finance scandal?

The car finance scandal came to light after it emerged that certain lenders had been paying undisclosed "secret" commissions to dealerships. This practice enabled dealers to determine interest rates on finance agreements, with steeper rates generating larger commissions for them. Consequently, numerous customers may have unwittingly agreed to finance deals with inflated interest charges.

An FCA investigation revealed that 44 percent of car finance agreements sold between April 2007 and November 2024 may be deemed unfair due to insufficient disclosure. In a statement, the regulator said: "Motor finance companies broke laws and regulations in force at the time by failing to disclose important information. This led to unfairness, with consumers denied the chance to negotiate or find a better deal and, in some instances, paying more for their loan."

You can see the FCA report here.

A 2024 Court of Appeal ruling raised the prospect of substantial compensation liabilities for lenders, with certain industry estimates pointing to potential costs of up to £44 billion. However, the majority of that judgment was overturned by the Supreme Court in August last year, significantly reducing lender liability.

How much might you be owed?

In the wake of the ruling, the FCA is now anticipated to establish the framework for a planned redress scheme. Under a proposed FCA redress scheme, lenders could be obliged to distribute £7.5 billion*. Eligible customers could secure average compensation of approximately £829* per claim.

Since Locksley Law's launch in October 2025, its clients have submitted more than two claims on average. According to the FCA statement, each claim could be valued at up to £829*, meaning a typical client may obtain a payout of up to £1,658**.

Who qualifies for compensation?

Anyone mis-sold a car finance agreement between April 2007 and November 2024 may be entitled to claim. This encompasses Hire Purchase (HP) and Personal Contract Purchase (PCP) agreements falling into one of the following categories:

• Discretionary Commission Arrangements (DCA): Banned by the FCA in 2021, DCAs allowed dealers to earn commission linked to the interest rate charged — often without customers knowing. This meant some drivers paid more than necessary for their vehicle finance.
• Unfair contracts: In certain cases, lenders had exclusive arrangements with dealerships. Customers may not have been given clear or accurate information about alternative or better-value finance options.
• Excessive commission rates: Some agreements included commission rates as high as 35 percent of the credit amount and 10 percent of the loan value. The FCA has deemed such arrangements unfair, with an estimated 2.9 million people potentially affected, according to the financial regulatory body.

How do I submit a claim?

If you suspect you were mis-sold car finance, the FCA is proposing a free redress scheme anticipated to commence in 2026.

Lenders will have three months from the end of the implementation period (June 30 this year for loans taken out from April 1, 2014, and until August 31 for those agreed earlier) to inform complainants whether they’re owed compensation and how much. This means that people who have already complained or who complain before the end of the relevant implementation period will be compensated sooner.

Nevertheless, participation in the scheme will not be compulsory. Consumers may still opt to pursue legal proceedings through the courts alternatively. You are under no obligation to submit a claim via a law firm or claims management company.

If you held a PCP or HP agreement between 2007 and 2024, you can contact Locksley Law to conduct a free, no-obligation agreement assessment and discover whether you could be entitled to compensation averaging £829*.

Visit www.locksleylaw.co.uk for additional information. For those who would rather use the FCA scheme, the regulator currently provides a template letter on its website for motorists who believe they may have been affected.

The FCA's website offers guidance for those who think their car, motorbike or van finance agreement was mis-sold during the relevant period. Once the scheme is operational, lenders will get in touch with eligible customers outlining their next steps.

*Average payout figure and Redress Scheme: www.fca.org.uk/news/statements/fca-confirms-motor-finance-redress-scheme

**Locksley Law has identified that client(s) have on average 2 agreements. Based on the FCA average £829* per agreement, potential claims estimated will be £1,658. Under the new redress scheme, Lenders will refund only affected agreements. Compensation depends on eligibility and FCA redress criteria*.

Locksley Law is a trading style of RH Law Ltd, authorised and regulated by the SRA (No. 659355). You do not need to use a Claims Management Company (CMC) or a Law Firm. You can complain directly for free to your lender, the Financial Ombudsman Service or use the FCA’s consumer redress scheme. Solicitor fees, if used, are up to 15% - 30% excluding VAT of any successful claim.