Individuals in the UK who suspect they were misled into car finance agreements between 2007 and 2024 may be eligible for compensation averaging around £1,400 per customer**.
A proposed compensation scheme by the Financial Conduct Authority (FCA) could result in over £8 billion* in payouts to car buyers. The FCA revealed that finance divisions of banks and automakers might have to compensate numerous car buyers affected by undisclosed commissions from April 2007 to November 2024. These buyers were not properly informed about the commissions paid to brokers, typically car dealers.
The estimated compensation sum includes £8.2 billion* for affected individuals. If you believe you were impacted by mis-sold car finance during this period, you can reach out to Locksley Law for a complimentary agreement check with no obligations.
Banks are preparing for substantial payouts, with Close Brothers earmarking £165 million and Santander setting aside £295 million, as reported by Reuters. Lloyds, a major player in car finance under its Black Horse brand, has allocated £1.95 billion, according to the BBC. Additionally, car manufacturers like Mercedes-Benz and BMW have set aside over £500 million, as per the Financial Times.
In anticipation of the significant compensations, we address key inquiries you may have.
The car finance scandal surfaced after revelations that some lenders were paying undisclosed “hidden” commissions to dealerships. This allowed dealers to determine interest rates on finance agreements, with higher rates leading to larger commissions. Consequently, many customers may have agreed to finance deals with inflated interest costs.
An investigation by the FCA found that 44% of car finance agreements sold between April 2007 and November 2024 might be deemed unfair due to inadequate disclosure. The regulator stated that motor finance companies violated laws by failing to disclose crucial information, resulting in unfair practices where consumers were deprived of the opportunity to negotiate better deals and potentially overpaid for their loans.
To access the FCA report, click here.
A 2024 ruling by the Court of Appeal raised concerns about significant compensation liabilities for lenders, with industry estimates hinting at potential costs reaching £44 billion. However, the Supreme Court overturned a substantial portion of this judgment in August last year, reducing lender liabilities significantly.
Subsequent to the ruling, the FCA is expected to formulate the guidelines for a proposed redress scheme.
Under the suggested FCA redress plan, lenders may be compelled to disburse £8.2 billion*, with some projections reaching as high as £11 billion*. Affected customers could potentially receive an average compensation of approximately £700* per claim.
Since its establishment in October 2025, Locksley Law customers have filed an average of over two claims. According to the FCA statement, each claim could yield up to £700*, potentially resulting in an average payout of up to £1,400** per client.
If you were subject to mis-sold car finance between April 2007 and November 2024, you may be eligible to file a claim. This encompasses Hire Purchase (HP) and Personal Contract Purchase (PCP) agreements falling under specific categories.
If you suspect you were a victim of mis-sold car finance, the FCA is proposing a no-cost redress scheme expected to commence in 2026.
Participation in the scheme is not obligatory. Consumers retain the option to pursue legal recourse through the courts. There is no obligation to engage a law firm or claims management company for making a claim.
If you had a PCP or HP agreement from 2007 to 2024, you can engage Locksley Law for a complimentary agreement review to assess potential compensation averaging £700*. Visit www.locksleylaw.co.uk for further information.
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