Britons who suspect they were provided with car finance under misleading terms between 2007 and 2024 may be eligible for compensation averaging around £1,400 per customer. The Financial Conduct Authority (FCA) has put forth a compensation scheme that could result in over £8 billion in payouts for car buyers. The FCA noted that banks and car manufacturers might have to pay out billions to rectify the impact of undisclosed commissions on certain car buyers during the period from April 2007 to November 2024. These buyers were not adequately informed about the commissions paid to brokers, mainly car dealers.
The estimated amount includes £8.2 billion in compensation. If you suspect you were subject to mis-sold car finance during that timeframe, you can reach out to Locksley Law for a complimentary agreement check without any obligations.
Financial institutions, such as Close Brothers setting aside £165 million and Santander earmarking £295 million, are preparing for substantial payouts. Lloyds, a major player in car finance under its Black Horse brand, has set aside £1.95 billion. Additionally, car manufacturers like Mercedes-Benz and BMW have allocated over £500 million each, as reported by the Financial Times.
In response to the potentially significant payouts, we have addressed some common queries you may have. The car finance scandal came to light after it was revealed that certain lenders were making undisclosed “secret” commissions to dealerships. This practice allowed dealers to manipulate interest rates on finance agreements, with higher rates resulting in larger commissions. Consequently, many customers may have unknowingly agreed to finance deals with inflated interest charges.
An investigation by the FCA found that 44% of car finance agreements sold between April 2007 and November 2024 lacked adequate disclosure and could be deemed unfair. The FCA stated that motor finance companies violated laws and regulations by withholding crucial information, leading to unfair practices that deprived consumers of the opportunity to negotiate better terms and potentially resulted in higher loan costs.
A 2024 ruling by the Court of Appeal raised concerns about substantial compensation liabilities for lenders, with some estimates suggesting potential costs of up to £44 billion. However, the Supreme Court overturned a significant portion of that judgment in August of the following year, thereby reducing lender liability.
Subsequent to the ruling, the FCA is expected to formulate the guidelines for a planned redress scheme. Under the proposed FCA redress scheme, lenders may need to disburse £8.2 billion, with some projections reaching as high as £11 billion. Affected customers could receive an average compensation of approximately £700 per claim.
Since its establishment in October 2025, Locksley Law clients have filed an average of more than two claims. Based on FCA’s statement, each claim could potentially yield up to £700, resulting in an average client receiving compensation of up to £1,400. Individuals who believe they were misled with a car finance agreement between April 2007 and November 2024 may be eligible to file a claim, inclusive of Hire Purchase (HP) and Personal Contract Purchase (PCP) agreements falling within specific categories.
If you suspect you were subject to mis-sold car finance, the FCA is proposing a complimentary redress scheme anticipated to launch in 2026. Participation in the scheme is not compulsory, and consumers retain the option to pursue legal action through the courts. You are not obligated to engage with a law firm or claims management company to file a claim. If you had a PCP or HP agreement between 2007 and 2024, you can approach Locksley Law for a free agreement review to ascertain potential entitlement to an average compensation of £700. Visit www.locksleylaw.co.uk for further information.
For those opting for the FCA scheme, the regulator has provided a template letter on its website for affected drivers. The FCA’s website offers guidance for individuals believing their car, motorcycle, or van finance agreement was mis-sold during the relevant period. Once the scheme is operational, lenders will communicate the next steps to eligible customers.