Millions of people who took out car finance between 2007 and 2024 could be owed compensation because of how dealers and brokers were paid commission. The Financial Conduct Authority (FCA) has set up a compensation scheme, but parts of it are on hold while legal challenges are heard. Here’s where things stand and what you can do now.
In short
The FCA’s compensation scheme covers car finance taken out between 6 April 2007 and 1 November 2024. Parts of it are suspended while the Upper Tribunal hears legal challenges from 16 to 26 February 2027, so lenders don’t currently have to calculate or pay compensation. You can still complain to your lender for free, and you don’t need a claims company.
What the scheme is for
For many years, some car finance deals let the dealer or broker set the interest rate and earn more commission the higher the rate was. These were known as discretionary commission arrangements. They were banned in January 2021. The FCA also found problems with very high commission and with undisclosed ties between brokers and lenders.
In March 2026, the FCA published the final rules for a compensation scheme (PS26/3). The FCA estimates around £7.5 billion will be paid out, with an average of about £830 per agreement.
Who could be owed money
The scheme covers agreements taken out between 6 April 2007 and 1 November 2024, where there was:
- a discretionary commission arrangement, where the broker could adjust your interest rate to earn more
- high commission, broadly at least 39% of the total cost of credit and 10% of the loan
- a tie between the broker and the lender that wasn’t properly disclosed
It covers cars, vans and motorbikes bought with HP or PCP. Some agreements are excluded, including 0% APR deals and those where the commission was very low.
Why parts of the scheme are on hold
Three lenders, Volkswagen Financial Services, Mercedes-Benz Financial Services and CA Auto Finance, and a consumer group, Consumer Voice, have challenged the scheme. On 2 July 2026, the Upper Tribunal partly suspended it while the challenges are heard.
The hearing is listed for 16 to 26 February 2027, with a judgment expected in the months after. Until then:
- lenders don’t have to calculate or pay compensation, or contact customers about payments
- lenders must still identify affected agreements, gather information and reply to customers who aren’t owed anything
If the scheme is upheld, payments could start in 2027. If it’s overturned in whole or in part, the FCA has said complaints could go back to being handled individually, which could take longer.
What you can do now
- Find your agreement details. Check old emails, paperwork or your credit file for the lender’s name and the date of the agreement.
- Complain to your lender if you think you’re affected. It’s free. Your lender’s website should have a page on motor finance commission complaints.
- Don’t pay to claim unless you want to. The FCA says you don’t need a claims management company or law firm, and that using one could cost you around 30% of any compensation.
- Watch out for scams. Hang up on unexpected calls saying you’re owed money, and never share bank details with someone who contacts you out of the blue.
You don’t lose anything by waiting for the legal process. If you haven’t complained and your lender later finds you may be owed money, the scheme rules mean it should contact you.
Does this affect your current finance?
No. The scheme is about how past agreements were sold. It doesn’t change your current payments, your right to settle early or voluntarily terminate, or what happens at the end of your agreement.
Compensation scheme FAQs
When will I get compensation?
Not before the legal challenge is decided. The hearing is in February 2027, so payments, if the scheme goes ahead, are unlikely before 2027.
Do I need a claims company?
No. The FCA says the scheme is designed to be free and easy to use, and a claims company or law firm could take around 30% of any money you’re owed.
My agreement was after November 2024. Am I covered?
No. The scheme covers agreements from 6 April 2007 to 1 November 2024.
I’ve already complained. What happens now?
Your lender has to keep your complaint on file and prepare it, but it doesn’t have to calculate or pay compensation while the scheme is partly suspended. It may write to you if you’re not owed anything.
How much could I get?
The FCA estimates an average of about £830 per agreement, including interest. The amount depends on your agreement, the commission paid and how much interest you paid.
Sources: FCA PS26/3, A&O Shearman summary of the FCA statement, 13 October 2026, FCA campaign on using claims companies.