Britons who suspect they were sold car finance improperly from 2007 to 2024 could potentially receive an average compensation of around £1,400 per customer. The Financial Conduct Authority (FCA) has proposed a compensation scheme that could result in car buyers collectively receiving over £8 billion in payouts. The FCA identified that banks and car manufacturers’ finance divisions may need to compensate certain car buyers affected by undisclosed commissions received by brokers, typically car dealers, between April 2007 and November 2024.
The estimated amount includes £8.2 billion in compensation. If you suspect you may have been a victim of mis-sold car finance during that timeframe, you have the option to contact Locksley Law for a complimentary agreement check without obligation.
Financial institutions are preparing for substantial payouts, with Close Brothers earmarking £165 million and Santander setting aside £295 million, according to reports. Lloyds, a major player in car finance via its Black Horse brand, has set aside £1.95 billion, as reported by the BBC. Leading car manufacturers such as Mercedes-Benz and BMW have also allocated over £500 million, as noted by the Financial Times.
Following revelations that some lenders paid undisclosed commissions to dealerships, the car finance scandal surfaced. This allowed dealers to manipulate interest rates on finance agreements, with higher rates resulting in greater commissions. Consequently, many customers may have entered into finance agreements with inflated interest costs.
An investigation by the FCA revealed that 44% of car finance agreements sold between April 2007 and November 2024 lacked adequate disclosure, potentially making them unfair. The FCA stated that motor finance companies violated laws and regulations in place at the time by failing to disclose crucial information, leading to unfair treatment of consumers who were deprived of the opportunity to negotiate better terms and, in some cases, ended up paying more for their loans.
A ruling by the Court of Appeal in 2024 raised concerns about significant compensation responsibilities for lenders, with some industry estimates suggesting potential costs of up to £44 billion. However, much of that judgment was overturned by the Supreme Court in the previous year, significantly reducing lender liabilities.
In the wake of the ruling, the FCA is now expected to establish the guidelines for a planned redress scheme. Under the proposed FCA redress scheme, lenders may be compelled to pay out £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 inception in October 2025, Locksley Law clients have filed an average of more than two claims. According to the FCA, each claim could potentially result in a payout of up to £700, meaning an average client could receive compensation of up to £1,400.
Individuals who believe they were victims of mis-sold car finance agreements between April 2007 and November 2024 may be eligible to make a claim, including those with Hire Purchase (HP) and Personal Contract Purchase (PCP) agreements falling within certain categories.
The FCA is proposing a free redress scheme expected to launch in 2026 for those who believe they were mis-sold car finance agreements. Participation in the scheme is voluntary, and consumers retain the option to seek legal recourse through the courts if they prefer. There is no obligation to pursue a claim through a law firm or claims management company.
If you had a PCP or HP agreement between 2007 and 2024 and suspect potential mis-selling, Locksley Law can conduct a complimentary agreement assessment to determine if you may be entitled to compensation averaging £700. Visit www.locksleylaw.co.uk for further information.
For individuals opting to utilize the FCA scheme, the regulator offers a template letter on its website for affected drivers. The FCA’s website provides guidance for those who believe their car, motorbike, or van finance agreements were mis-sold during the specified period. Eligible customers will be contacted by lenders once the scheme is operational to outline the next steps.
*Figures mentioned in the FCA statement represent estimates. **Based on the latest data as of March 2026, Locksley Law clients have an average of 2.6 claims each, potentially resulting in compensation of £1,400 or more per claim.
