Millions of UK citizens may be entitled to an enhanced compensation amount of £830 following a significant development in the car finance mis-selling controversy. Despite this revised sum, legal experts at HD Law have raised concerns regarding whether affected drivers are receiving their rightful reimbursements as the compensation process advances.
HD Law’s historical data indicates that drivers could potentially receive more than double the £830 sum suggested by the Financial Conduct Authority (FCA). Late last night, it was announced that compensation is anticipated to be distributed for over 12 million car finance agreements that were mis-sold between 2007 and 2024.
Although the FCA has revised the initial estimate downward, the average compensation per agreement has risen to approximately £830. The FCA predicts that 75% of eligible consumers will file claims, with a potential total redress amounting to £7.5 billion.
Previously, the FCA projected an average payout of around £700 for participants in the scheme, with the overall cost potentially exceeding £8 billion. However, the updated figure of £830 does not accurately reflect the potential individual entitlements if claimants pursue legal recourse.
If you purchased a car, van, or motorcycle through PCP or Hire Purchase between 2007 and 2024, you may be among the millions eligible for compensation. Approximately 14 million agreements were deemed mis-sold, and under the proposed scheme by the FCA, individuals could receive compensation if they secured vehicle finance for a car, van, motorcycle, or campervan between April 6, 2007, and November 1, 2024.
HD Law aims to secure full reimbursement of the commission paid, and due to the possibility of a judicial review of the entire lending agreement, payouts could be substantially higher. This approach has resulted in HD Law clients currently receiving an average of £1,846.23 per financed vehicle, as per the firm’s Trustpilot score of 4.7.
According to the firm, individuals could potentially claim even more if they had multiple car finance agreements during the specified period. You do not have to wait for the lender to reach out to you, as they may not have your current contact information. You can assess your eligibility within 60 seconds today through HD Law by entering your postcode and some basic details, allowing the tool to retrieve all your Personal Contract Purchase deals from 2007 to 2024 automatically.
Kevin Durkin, Director of HD Law, expressed dissatisfaction with the FCA’s handling of the matter, highlighting discrepancies in the redress scheme and the potential impact on compensation amounts for affected consumers. If you suspect you were a victim of car finance mis-selling, the FCA is proposing a no-cost redress scheme expected to be launched in 2026. However, participation in the scheme is voluntary, and individuals retain the option to pursue legal action independently.
For those opting for the FCA scheme, the regulator offers a template letter on its website for individuals who believe they were impacted. Eligible customers will be contacted by lenders with further instructions once the scheme is operational. Lenders are required to notify complainants within three months from the end of the implementation period regarding potential compensation owed, resulting in expedited compensation for early claimants.
To qualify for compensation, the agreement must have been a Personal Contract Purchase or Hire Purchase for personal use (leased vehicles are excluded). Those entitled to reimbursement were subject to discretionary commission arrangements, which involved agreements between car dealers and lenders. These arrangements led to customers being charged higher interest rates due to commissions received by dealers, a practice prohibited by the FCA in 2021.