FCA Introduces a Nationwide Auto Finance Compensation Programme in the UK
March 30, 2026 – The Financial Conduct Authority (FCA) has officially unveiled the comprehensive details of a nationwide car finance compensation programme aimed at remedying historical instances of mis-selling. This initiative responds to revelations that many consumers were overcharged for vehicle financing due to undisclosed commission arrangements.
The scheme is projected to benefit approximately 12.1 million car finance agreements, with an estimated total redress amounting to £7.5 billion. Eligible claimants can expect an average payout of around £829 for their agreements.
Key Scheme Highlights
- Average Payout: Claimants can anticipate receiving about £829.
- Coverage: The scheme encompasses around 12.1 million finance agreements.
- Payout Timeline: Disbursements are set to begin later in 2026, with hopes that most claims will be resolved by the close of 2027.
Who is Eligible?
Consumers who secured car finance agreements for personal use between April 6, 2007, and November 1, 2024, may qualify for compensation if their agreements involve certain unfair terms. These include:
- Finance Types: Personal Contract Purchase (PCP) or Hire Purchase (HP) arrangements are covered, while personal contract hire (leasing) and 0% interest deals are generally excluded.
- Undisclosed Terms: Consumers must have been subjected to undisclosed commission arrangements, such as discretionary commission agreements allowing dealers to raise interest rates, high commission rates exceeding 39% of the total cost of credit, or undisclosed exclusive relationships between lenders and dealers.
How to Claim
The FCA advises claimants to directly contact their lenders rather than using third-party firms to facilitate claims. Steps for consumers include:
- Submit Claims Early: Those who have not yet lodged a complaint are encouraged to do so before the scheme commences to expedite their payouts. Free template letters are provided on the FCA website and MoneySavingExpert.
- Await Communication: Lenders are obligated to reach out to potentially eligible customers who have not filed complaints within six months of the scheme’s start.
- Final Deadline: New complaints must be submitted by August 31, 2027.
Important Deadlines
| Agreement Start Date | Scheme Start Date | Lender Response Deadline (if complained early) |
|---|---|---|
| Before April 1, 2014 | August 31, 2026 | November 30, 2026 |
| After April 1, 2014 | June 30, 2026 | September 30, 2026 |
Once an offer is accepted, lenders are required to process payments within one month.
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