How to check if you were mis-sold car finance and if you could claim a payout

Motorists across Britain are being alerted that they may have been mis-sold car finance if they purchased a vehicle prior to January 2021.

The Financial Conduct Authority (FCA) is currently probing a scandal that allowed lenders to permit brokers to modify the interest rates offered to customers for motor finance deals.

The arrangement meant the higher the interest rate set, the greater the commission the broker would pocket.

These discretionary commission arrangements (DCAs) resulted in customers paying over the odds, as brokers were incentivised to bump up the fees.

The FCA outlawed this practice in 2021 and is presently examining these agreements, stating on its website that since the prohibition there has "been a high number of complaints from customers about how much they were charged before the ban", reports the Mirror.

The regulator continued: "Providers were rejecting most of these complaints, because they believe they haven't acted unfairly and haven't caused customers to lose out. Once we get the Supreme Court's decision, if we find that motor finance customers have lost out, it's likely we'll consult on introducing a redress scheme."

Anyone who purchased a motor vehicle on finance before 28 January 2021 could be entitled to make a claim. This encompasses not only cars, but also vehicles such as vans, camper vans and motorbikes.

Brits can check if they're eligible to make a complaint, for example if they feel their car finance agreement was unfair, or they weren't informed that the dealer would be receiving a commission for arranging the deal.

You can easily check for free; in fact, the FCA provides a useful guide on its website here.

The FCA is currently scrutinising the DCAs and should it uncover any "widespread misconduct" that caused consumer detriment, it will consider ways to ensure affected customers receive compensation. Nonetheless, you're still entitled to lodge a complaint while the authority's investigation is ongoing.

Checking your eligibility for free is one option, but you could also opt for the services of a Claims Management Company (CMC). However, the FCA has cautioned UK residents to think twice before going down this route.

These companies may offer assistance with your claim, charging a fee for their services, or they might refer you to solicitors who can also support your claim.

Should you decide to engage a CMC, it's crucial to verify that it's approved by the FCA using their firm checker available here, or that it's regulated by a legal regulator. More information on this can be found on the FCA's website.

A major warning sign to watch out for is if a company fails to inform you that you can file a complaint yourself for free.

A few examples of CMCs which are authorised by the FCA include:

• My Claim Group
• Allegiant Finance Services

The FCA has issued guidance stating: "Claims management companies (CMCs) are aware of the time limits that apply depending on the stage of your complaint. Your CMC should keep you up to date on the progress of your complaint. Contact your CMC if you want more information."

A significant development in the ongoing scandal occurred in October last year, when the Court of Appeal deemed non-disclosure of commissions on car loans as unlawful. This landmark ruling has triggered an influx of complaints, with the Financial Ombudsman Service reporting a record-breaking 18,658 new car finance cases filed in the final quarter of 2024.

In January 2025, UK Chancellor Rachel Reeves stepped in, aiming to shield lenders from potentially colossal payouts, citing concerns over the wider economic repercussions and the effect on consumer access to car finance.

Currently, the Supreme Court is deliberating on a crucial appeal by car loan providers, which follows earlier decisions that have sided with consumers. In light of this, the FCA has put a temporary hold on processing complaints until the Supreme Court delivers its verdict, anticipated later in the year.