How Car Finance Might Work Post-Scandal?

Car finance in the UK is changing because regulators and courts have challenged how dealers and lenders used commission for years. As a result, you should expect clearer disclosures, tighter commission controls, and a more standardised route to compensation for historic agreements.

Featured snippet summary: Post-scandal car finance is likely to become more transparent, with less room for “rate steering” and clearer explanations of commission. If you took a PCP or hire purchase agreement between 2007 and 2024, you may be eligible for a refund where commission or relationships were not handled fairly.

What was the “car finance scandal” actually about?

In simple terms, many complaints focus on commission models that could encourage higher interest rates or hide important information from customers.

Key points driving the scandal:

• Discretionary commission arrangements (DCAs): Before the ban, some lenders let dealers adjust the interest rate, and the dealer earned more commission when the rate went up. The FCA banned DCAs from 28 January 2021.
• Disclosure of commission and relationships: Disputes grew around whether customers were told about commission payments (and, in some situations, dealer/lender relationships) clearly enough to give informed consent.
• Legal pressure: The Supreme Court’s decision on 1 August 2025 narrowed some arguments (for example, dealers generally not owing fiduciary duties), while still recognising that some cases may amount to an “unfair relationship” under consumer credit law in specific circumstances.

What changes after a scandal like this?

Even before any redress scheme pays out, scandals typically reshape how finance is sold. Here’s what “post-scandal” car finance is likely to look like in practice.

1) More upfront transparency at the point of sale

Dealers and brokers should make it easier to understand:

• who the lender is
• what the APR is based on
• whether commission is paid, and how it works (where relevant)

The FCA has repeatedly signalled that customers must be treated fairly and that historic harm linked to commission practices needs addressing.

2) Less “rate flexibility” and more standardised pricing

Because DCAs are banned, the old incentive to increase a customer’s rate to earn higher commission should not exist in the same way going forward.

So, you may see:

• fewer unexplained differences between offers for similar customers
• more reliance on lender-set rates and credit criteria
• stronger audit trails for how the rate was determined

3) Tougher oversight because the market is huge

Motor finance matters because it funds a big share of vehicle purchases. FCA research connected to its 2025 consultation notes that point-of-sale motor finance accounts for over 80% of private new car sales and 19% of used car sales (2024)—so changes here affect millions of drivers.

The FCA’s likely route to compensation: a redress scheme

The FCA has moved toward an industry-wide redress scheme as a faster way to handle high volumes of complaints, instead of forcing everyone through individual case-by-case fights.

Who could be in scope?

The FCA’s consultation described a potential scheme for customers treated unfairly on regulated motor finance agreements between 2007 and 2024.

Complaint “pause” and timing

To prevent firms from rushing final responses before the FCA finalises the scheme, the FCA changed complaint-handling timelines for many motor finance commission complaints. It also clarified that leasing agreements are excluded from a potential scheme and must resume final responses from 5 December 2025.

How big could the scheme be?

Reuters reported the FCA estimated total redress could be around £11 billion, affecting millions of agreements.
(Headlines and estimates have moved around, so your personal eligibility will depend on your agreement type, dates, and what disclosures you received.)

What does this mean for getting finance now?

If you’re taking car finance in 2026, you can protect yourself by changing how you shop.

Ask these questions before you sign

Use plain, direct questions:

1. “Is commission paid on this agreement?”
2. “Can the interest rate change depending on which lender you pick?”
3. “Show me the total amount payable, not just the monthly figure.”
4. “What happens at the end of the PCP—balloon, mileage, damage charges?”

Then, compare at least two alternative options (another lender, or a personal loan) so you can spot outliers quickly.

Watch out for these red flags

• A salesperson focuses only on the monthly payment, while avoiding total cost.
• You feel rushed, or you don’t receive documents until late.
• The APR feels high compared with your credit profile, without a clear reason.
• You weren’t offered genuine choice between finance options.

Could you still claim compensation for an older agreement?

Potentially, yes—especially if you had PCP or hire purchase where commission or key relationships were not disclosed clearly enough, or where the overall relationship may be considered unfair.

National Claims can help you check eligibility and progress your complaint efficiently—without you having to decode the legal and regulatory detail yourself.

Compensation estimate: what might a refund include?

A successful outcome may involve refunding some of the interest/charges linked to the unfairness, plus additional interest in some scenarios (depending on the final rules and method used). The FCA is exploring a streamlined approach to handle claims at scale.

Here’s a simple, realistic guide to outcomes people commonly discuss in this space (your result depends on your facts):

What happened	What you might recover	Typical evidence
You weren’t clearly told about commission that affected the deal	Refund of part of interest/charges linked to the unfairness, potentially plus interest	Agreement docs, pre-contract info, dealership emails, lender letters
Your rate appears “inflated” versus what you likely qualified for	Difference in cost (interest) compared with a fair rate approach, depending on scheme rules	Credit profile at the time, quote history, lender rate data
The overall relationship may be “unfair” under consumer credit law in specific scenarios	Court/FCA-style redress, depending on the final framework	Full paper trail, disclosures, commission indicators

If car finance stress led to wider claims, National Claims can help

Sometimes the finance issue is only one part of the story.

For example, people also come to National Claims for:

• road traffic accident compensation
• accident at work claims
• occupiers’ liability (slips, trips, and falls)
• housing disrepair
• medical negligence

When injuries are involved, solicitors often use the Judicial College Guidelines to value pain, suffering, and loss of amenity (the exact bracket depends on medical evidence).

Frequently Asked Questions: Car finance post-scandal

1. Will car finance be cheaper now?

Not automatically. However, you should see less scope for hidden incentives that push rates higher, because DCAs are banned and scrutiny is higher.

2. Does this affect PCP, hire purchase, and personal contract hire?

Most attention is on regulated agreements like PCP and hire purchase where commission practices caused harm. The FCA has said leasing agreements are excluded from any potential redress scheme (and firms must resume final responses for leasing complaints).

3. Is there definitely a compensation scheme?

The FCA consulted on an industry-wide scheme and indicated timing for final rules in early 2026.

4. What if I don’t have my old paperwork?

You can still start. Lenders often hold records, and your bank statements, emails, and credit report can help rebuild the timeline.

5. Do I need to complain right now?

If you think you were affected, it’s still smart to gather documents and get advice, because rules and deadlines can change once the FCA finalises its approach. National Claims can help you take the right next step based on the current position.

Ready to check if you’re owed a car finance refund?

If you took car finance between 2007 and 2024, and you suspect commission wasn’t properly your interest rate looks unfair. National Claims can help you understand your options and pursue compensation with the least hassle.

Customers pay up to 25% (incl. VAT) of the amount recovered towards solicitor costs and if you cancel outside your cooling off period, you may be charged a fee.

Don’t wait while your claim window closes. Speak with National Claims today. We’ll connect you with experienced solicitors who understand your case and fight for the maximum compensation you deserve.