Brits who bought cars between two dates could be owed £829 in major ruling

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

Brits who believe they were mis-sold car finance between 2007 and 2024 could be entitled to compensation averaging up to £1,658 per customer under a proposed FCA redress scheme

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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 FCA has said some customers were not adequately informed about the commission payments lenders made to intermediaries, typically car dealerships.

The projected sum is made up of £7.5 billion* in compensation payments. If you suspect you may be amongst those mis-sold vehicle finance during that timeframe, you can approach Locksley Law to conduct a complimentary, no-obligation agreement review.

Given the potentially enormous settlements, we've addressed the pressing questions you might have.

What is the car finance scandal?

The car finance scandal came to light when it was discovered that undisclosed "secret" commissions were being paid by some lenders to dealerships. This practice enabled dealers to dictate the interest rates on finance agreements, with higher rates yielding larger commissions. As a result, numerous customers may have consented to finance deals featuring inflated interest charges.

An inquiry conducted by the FCA revealed that 44 percent of car finance agreements sold between April 2007 and November 2024 could be deemed unfair due to insufficient disclosure. The regulator stated: "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 view the FCA report here.

How much is at stake?

A Court of Appeal ruling in 2024 hinted at substantial compensation liabilities for lenders, with industry estimates suggesting potential costs could reach up to £44 billion. However, the majority of this judgment was overturned by the Supreme Court in August of the following year, significantly reducing lender liability.

Under a proposed FCA redress scheme, lenders could face payouts totalling £7.5 billion*.. Eligible customers might receive average compensation of approximately £829* per individual claim.

Following 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 potentially be valued at up to £829*, meaning a typical client may secure payouts reaching £1,658**.

Who qualifies for compensation?

Individuals mis-sold car finance agreements between April 2007 and November 2024 may be entitled to claim. This encompasses Hire Purchase (HP) and Personal Contract Purchase (PCP) arrangements falling within 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?

Should you suspect you were mis-sold car finance, the FCA is proposing a free redress scheme anticipated to commence in 2026. Participation in the scheme remains voluntary. Consumers retain the option to pursue legal proceedings through the courts alternatively. There is no requirement to submit a claim via a law firm or claims management company.

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.

If you held a PCP or HP agreement between 2007 and 2024, you can approach Locksley Law for a complimentary, no-obligation agreement assessment to determine whether you could be entitled to compensation averaging £829*.

Visit www.locksleylaw.co.uk for additional information. For those opting to utilise the FCA scheme, the regulator presently offers a template letter on its website for motorists who believe they were impacted. Guidance is available on the FCA's website for individuals suspecting their car, motorbike or van finance agreement was mis-sold during the applicable period. Once the scheme is operational, lenders will reach out to eligible customers outlining the 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.

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