Can I claim compensation for mis-sold car finance in the UK?
Yes, you may be able to claim compensation if you took out a PCP or HP agreement before January 2021 and were not told about hidden commissions or unfair interest rates. The FCA is working towards a redress scheme that could see millions of drivers receive refunds.
What Is Happening With Mis-Sold Car Finance in July 2025?
The Financial Conduct Authority (FCA) is edging closer to launching a major redress scheme for drivers mis-sold car finance deals. A landmark ruling from the Supreme Court is expected in July 2025, which could pave the way for compensation to millions of consumers.
If you took out a Personal Contract Purchase (PCP) or Hire Purchase (HP) car finance deal before 28 January 2021, and weren’t informed about commission arrangements or inflated interest rates, you could be eligible for a refund.
The FCA has already banned discretionary commission models that encouraged car dealers to increase interest rates for extra earnings. Now, they’re looking to fix the damage done before the ban came into place.
Why Is This Important?
Discretionary commissions meant that car dealers had a financial incentive to charge customers more in interest. In many cases, buyers were unaware this was even happening.
According to the FCA, this practice led to serious consumer harm. Many motorists were locked into deals that cost them hundreds or even thousands more than necessary.
In 2024, the Court of Appeal ruled that such practices were unfair and potentially unlawful. This opened the door for mass claims, and now the Supreme Court is set to deliver a final judgment.
What Has the FCA Said So Far?
In March 2025, the FCA confirmed that they are preparing for a potential Section 404 redress scheme. This would require car finance companies to proactively identify and compensate affected customers.
According to fca.org.uk, the scheme will likely follow these principles:
- Firms must find and refund customers without them having to complain.
- The scheme could cover both discretionary and non-discretionary commission cases.
- An opt-out model is being considered, meaning you’d automatically be included unless you choose otherwise.
This is great news for consumers who may not know they were mis-sold in the first place.
How Much Compensation Can You Claim?
Compensation will depend on how much extra you paid due to inflated interest rates or undisclosed commissions.
Typical refund amounts may range from £300 to over £5,000, depending on the value of the car, the finance agreement, and how long you paid into it.
Example:
- If you financed a £12,000 car and paid 4% more interest than you should have, you might be owed around £1,000-£2,000.
The final redress amounts will likely be calculated based on the difference between the fair interest rate and what you were actually charged.
What Should You Do Now?
You don’t need to wait for the FCA scheme to begin. It’s a good idea to gather your documents now:
- Finance agreement
- Monthly payment records
- Car purchase invoice
This will make the process quicker once the scheme opens.
National Claims can help connect you with experienced solicitors who specialise in financial mis-selling claims. They can review your case and handle all the paperwork on your behalf.
Why National Claims?
Making a mis-sold car finance claim can be complex, especially if you’re not sure whether you qualify. National Claims works with a panel of trusted UK solicitors who understand the ins and outs of FCA rules and redress processes.
Whether you’re still repaying the loan or have already completed the agreement, you may still be eligible. With support from legal professionals, you can be confident your claim is in good hands.
People Also Ask
1. What is mis-sold car finance?
Mis-sold car finance happens when a dealership or lender doesn’t properly explain the terms of your agreement or fails to disclose commissions. This can lead to higher interest rates and hidden costs.
2. Who is eligible for a mis-sold car finance claim?
You may be eligible if you took out a PCP or HP car finance agreement before January 2021 and weren’t told about dealer commissions or interest rate manipulation.
3. When will the FCA redress scheme begin?
The FCA is expected to announce the scheme after the Supreme Court ruling in July 2025. A public consultation will follow, with implementation likely in 2026.
4. Do I need a solicitor to claim compensation?
While it’s possible to claim directly, working with an experienced solicitor can make the process easier. National Claims can help connect you with trusted legal experts.
5. How far back can I claim for mis-sold finance?
Generally, you can claim up to six years from the end of the agreement or when you became aware of the mis-selling.
Final Thoughts
The FCA’s redress scheme could be a game-changer for millions of UK drivers. If you were mis-sold a car finance deal, now is the time to act. Start gathering your paperwork and consider speaking with a solicitor about your options.
With a Supreme Court decision expected in July 2025 and an FCA consultation to follow, compensation may be just around the corner.
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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