Britons who suspect they were misled in car finance deals from 2007 to 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 to car buyers. This scheme aims to address undisclosed commissions paid by finance arms of banks and car manufacturers to compensate customers who were not fully informed about the commissions lenders paid to brokers, typically car dealers.
The estimated compensation amount includes £8.2 billion, with several financial institutions making provisions for significant payouts. Close Brothers has allocated £165 million, Santander £295 million, Lloyds via its Black Horse brand set aside £1.95 billion, and carmakers like Mercedes-Benz and BMW have earmarked over £500 million for potential compensations.
The car finance scandal surfaced when it was revealed that some lenders were providing undisclosed “secret” commissions to dealerships. These commissions allowed dealers to manipulate interest rates on finance agreements, potentially resulting in customers agreeing to deals with inflated interest charges.
A review by the FCA discovered that 44% of car finance agreements sold between April 2007 and November 2024 lacked adequate disclosure, leading to unfair practices where consumers were deprived of the opportunity to negotiate better terms or find more favorable deals.
In response to these findings, the FCA is expected to establish rules for a redress scheme following a ruling in 2024 by the Court of Appeal that hinted at significant compensation responsibilities for lenders, though the Supreme Court later reduced the liability.
Under the proposed FCA redress scheme, lenders could be obligated to pay out £8.2 billion, with potential estimates reaching up to £11 billion. Affected customers might receive an average compensation of approximately £700 per claim. Locksley Law, operational since October 2025, has seen its customers averaging more than two claims each, potentially leading to payouts of up to £1,400 per client as per the FCA’s calculations.
Consumers who believe they were affected by mis-sold car finance agreements between 2007 and 2024 may be eligible for claims under the forthcoming FCA redress scheme set to debut in 2026. Participation in the scheme is voluntary, and individuals can choose to pursue legal action independently if preferred.
For those with HP or PCP agreements during the specified period, Locksley Law offers a complimentary agreement check to assess potential compensation entitlements averaging £700. Details can be found at www.locksleylaw.co.uk. The FCA provides resources on its website for affected individuals to file complaints, and once the scheme is operational, eligible customers will be contacted by lenders with further instructions.