The car finance industry in the UK has been rocked by a growing scandal that could see millions of drivers entitled to compensation. If you’ve ever financed a car—whether it was a shiny new model or a reliable second-hand one—you might be wondering what’s going on and whether you’re affected. Don’t worry; this article will break it all down in simple terms, explain how much compensation you could claim, and show you how to take action. Plus, we’ll let you know how National Claims can help you get in touch with experienced solicitors to guide you through the process.
What’s the Car Finance Scandal All About?
Let’s start with the basics. The Financial Conduct Authority (FCA), the UK’s financial watchdog, launched an investigation in early 2024 into how car finance deals were sold between 2007 and 2021. Why? Because many customers were overcharged due to hidden commission arrangements between lenders and car dealers. These sneaky deals, known as Discretionary Commission Arrangements (DCAs), allowed dealers to bump up interest rates on loans to pocket bigger commissions—without telling you, the buyer.
Imagine this: you walk into a dealership, excited to drive away in your new car. You agree to a finance deal, thinking you’re getting a fair rate. But behind the scenes, the dealer tweaks the interest rate higher, earning extra cash at your expense. That’s the crux of the issue. The FCA banned DCAs in 2021, but millions of deals signed before then could now lead to payouts.
Fast forward to October 2024, when a Court of Appeal ruling shook things up even more. It decided that all secret commissions—not just DCAs—were unlawful if customers weren’t informed. Suddenly, the floodgates opened, and the number of people who might claim compensation skyrocketed. Now, banks and lenders are bracing for a massive bill, potentially rivalling the £50 billion paid out in the Payment Protection Insurance (PPI) scandal.
Are You Eligible?
So, who can claim? If you took out car finance between April 2007 and January 2021, you might be in line for a payout. This includes popular options like Personal Contract Purchase (PCP) agreements or hire purchase deals. It doesn’t matter if you’ve already paid off the loan or sold the car—eligibility depends on when you signed the agreement.
However, there’s a catch. The investigation initially focused on DCAs, but the recent court ruling widened the scope to include any undisclosed commissions. If your deal involved a commission—discretionary or fixed—and you weren’t told about it, you could have a case. The FCA estimates that over 2 million people buy cars on finance each year, so this affects a huge chunk of UK drivers.
Unsure if you’re affected? Check your old paperwork or contact your lender. Even better, National Claims can connect you with experienced solicitors who’ll dig into the details for you—no stress required.
How Much Compensation Can You Claim?
Now, the big question: how much could you get? Compensation varies depending on your situation, but estimates suggest an average payout of around £1,100 per person. Some experts, like Martin Lewis from MoneySavingExpert, have said it could climb higher—potentially £1,600 or more—for those hit hardest by inflated interest rates.
Here’s how it works: if you were overcharged due to a hidden commission, you’d likely be refunded the extra interest you paid, plus some compensation for the hassle. For example, if your £10,000 loan had an interest rate jacked up by 2% because of a commission, you might have paid hundreds—or even thousands—extra over the years. The FCA is still figuring out the exact payout process, but banks like Lloyds and Barclays have already set aside £1.29 billion to cover claims, according to The Sun (20 February 2025).
Of course, the final amount depends on your loan size, interest rate, and how long you paid it. Still, with analysts predicting a total bill of £16 billion to £30 billion, there’s a lot of money to go around.
Mis-sold Vehicle Finance Claims Checker
Our mis-sold car finance claims calculator below estimates the level of compensation you may be able to reclaim for a mis-sold car finance agreement.
Add the value of your vehicle, the length of your agreement, and the interest rate you paid to the calculator below. Then, compare this against a rate that you may have been offered if you weren’t mis-sold.
Mis-Sold Car Finance Claims Calculator
Estimated Compensation: £
Disclaimer : The Mis-sold Vehicle Finance Claims calculation is illustrative, and under no circumstances should it be used or relied upon in the pursuit of a claim. If you need more help and clear understanding Contact National Claims.
What’s Happening Now?
The FCA’s investigation is ongoing, and things are moving fast. After the Court of Appeal ruling, lenders like Close Brothers and FirstRand appealed to the Supreme Court, which agreed to hear the case in December 2024. Meanwhile, the FCA extended the deadline for firms to respond to complaints until 4 December 2025, giving them time to handle the flood of claims (FCA.org.uk, 18 December 2024).
This delay might sound frustrating, but it’s good news for you. It means you’ve got until the end of 2025 to file a complaint without worrying about firms dodging responsibility. Plus, the FCA is considering a “mass redress scheme”—a bit like PPI—where compensation could be paid out automatically to eligible customers. They’re aiming to announce next steps by May 2025, so watch this space.
How to Take Action
Ready to claim? Here’s what to do, step-by-step:
- Check Your Eligibility: Dig out your finance agreement or contact your lender to see if commissions were involved. If you’re not sure, don’t panic—solicitors can help.
- File a Complaint: Write to your lender, explaining you believe you were mis-sold finance due to hidden commissions. The FCA has a handy guide on how to do this (FCA.org.uk, “How to Complain”).
- Wait for a Response: Lenders have until December 2025 to reply, but you might hear back sooner.
- Get Expert Help: If it feels overwhelming, National Claims will put you in touch with experienced solicitors who’ll handle your claim from start to finish. They’ll check your case, file the paperwork, and fight for the best payout—no heavy lifting on your part.
Why go through National Claims? Because navigating this scandal solo can be tricky. Solicitors know the ins and outs of financial mis-selling laws and can spot things you might miss. Plus, with lenders swamped by complaints—Lloyds alone sent 200,000 letters to one law firm, per The Telegraph (17 November 2024)—having an expert in your corner makes all the difference.
Why This Matters
Beyond the cash, this scandal is about fairness. Millions of everyday drivers were overcharged without knowing it, and now’s your chance to get justice. The motor finance market powers the UK—80% of new cars are bought on finance (Yahoo Finance, 22 January 2025)—so holding firms accountable keeps it honest for everyone.
Moreover, the ripple effects are huge. Lenders are scrambling, setting aside billions, while the government worries about the industry’s stability (BBC News, 21 January 2025). But for you, it’s simple: if you were mis-sold, you deserve your money back.
Final Thoughts
The car finance scandal might sound complicated, but it boils down to this: if you financed a car before 2021, you could be owed compensation. Whether it’s £1,100 or more, that’s money you’re entitled to—and National Claims can help you claim it hassle-free. Their experienced solicitors will guide you every step of the way, ensuring your case is rock-solid.
So, don’t wait. Check your eligibility, file your complaint, and let the experts take it from there. With billions on the table and deadlines looming, now’s the time to act. Head to Gov.uk for more on your consumer rights, or reach out to National Claims today. Your payout could be just a few steps away!
Contact National Claims today, and we will put you in touch with an expert solicitor who can guide you through the claims process.📞 Call us now free 0800 029 3849 or 📩 Submit an online enquiry to speak to our team. Your safety and well-being matter, and we’re here to help.
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