Join two million Brits and find out if you're owed a £4,000 car finance refund

Millions of Brits have already begun to submit claims as the full extent of the car finance scandal comes to light.

So far more than two million people have started claims through My Claim Group, an organisation which is helping people find out if they are owed money. This year motorists could be in line for a payout reaching into the thousands, following revelations of a car finance mis-selling scandal that's been compared to the infamous Payment Protection Insurance (PPI) fiasco.

Many drivers are only now realising they have been shelling out more than necessary for years. At the heart of this scandal is the undisclosed and sometimes "secret" commissions paid by lenders to car dealerships, which have resulted in customers unwittingly signing up for finance agreements with inflated interest rates.

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The full scale of the issue has recently emerged, and all eyes are on a major UK Supreme Court judgement anticipated later in 2025. This decision will determine the amount car finance lenders must return to their customers. If you've purchased a vehicle through a Personal Contract Purchase (PCP) or Hire Purchase (HP) before 28 January 2021, you might be entitled to claim back £1,000s.

My Claim Group stands ready to assist those who have been affected, or suspect they might have been, in recovering their lost funds.

Find out how much you could be owed today with My Claim Group.

MCG reports that nearly half of all HP and PCP contracts struck between 2007 and 2021 could involve hidden commissions, indicating that many consumers could have overpaid and are now eligible for compensation. From the 1.2 million claims processed so far, the average value recovered per claim stands at about £4,000.

Below is our comprehensive guide to navigating the car finance mis-selling scandal.

When did this all begin?

Prior to changes in regulations in 2021, many car finance deals were set up with "discretionary commission arrangements." Under this system, the car dealers had the freedom to determine the interest rates of the finance offers they presented. Notably, the larger the interest rate, the heftier the commission they stood to gain.

Such arrangements obviously led to a conflict of interest, with dealerships incentivised to push higher interest loans onto consumers, regardless of whether these were the most economical choices. All too frequently, the commission details were not made transparent, leading customers to take on loans that were pricier than necessary, all the while unaware they were subject to terms shaped by the dealers' drive for higher commissions.

The Financial Conduct Authority (FCA) intervened by prohibiting these discretionary commission models from January 2021 to encourage better clarity and consumer protection. However, following further enquiries, it came to light that many of these dubious practices dated back to 2007, instigating a comprehensive reassessment of prior lending activities.

A pivotal moment occurred in October 2024, when the Court of Appeal decreed that the non-disclosure of commissions on car loans was illegal. This judgement broadened the scope for mis-selling claims, establishing a precedent that any concealed commission arrangements could now be grounds for consumer compensation.

This verdict has triggered an influx of complaints, with the Financial Ombudsman Service recording a record-breaking 18,658 new car finance cases in the final quarter of 2024.

How big a deal is this?

The financial fallout for lenders has been colossal. In the wake of the Court of Appeal's ruling, Lloyds Banking Group has upped its provision for potential compensation payouts to £1.1 billion, for instance. Analysts are predicting that the total blow to Lloyds could surpass £4 billion.

Other major lenders, including Santander UK, Close Brothers, and Barclays, are also staring down the barrel of substantial potential liabilities, with some industry estimates suggesting that total compensation costs could hit up to £30 billion.

What's the current situation?

The scandal has spurred government action. In January 2025, UK Chancellor Rachel Reeves stepped in to intervene in the Supreme Court case to shield lenders from potential multibillion-pound payouts, voicing worries about the wider economic repercussions and the possible effect on consumers' access to car loans.

At the same time, claims management firms like My Claim Group is actively urging customers to lodge complaints. The Supreme Court is currently examining a crucial appeal by car loan providers, in light of past judgements that sided with consumers. The FCA has momentarily halted the complaints procedure until the court's verdict, expected later this year.

The result of this appeal will be instrumental in establishing the accountability of lenders.

What can I do?

If you suspect you may have been affected by the scandal, head over to the My Claim Group website for more details and start the straightforward process to determine if you're due a refund.