The High Court has ruled that a three-year-old girl was not habitually resident in England and...
The Financial Conduct Authority (FCA) has confirmed a major compensation scheme for car finance customers, following widespread concerns that consumers were not given key information when entering into motor finance agreements.
The scheme is expected to benefit millions of customers across the UK, with the average compensation payout estimated at around £830.
Who Does the Scheme Apply To?
The compensation scheme applies to motor finance agreements taken out between 6 April 2007 and 1 November 2024.
Customers may be eligible where they were not properly informed about commission arrangements or other key aspects of their agreement.
Why Compensation Is Being Offered
The FCA found that many customers were not given clear information about how finance deals were structured. This lack of transparency may have:
- Prevented customers from comparing better finance options
- Resulted in higher interest rates
- Increased the overall cost of borrowing
Who May Be Eligible to Claim?
You may be entitled to compensation if you were not clearly told that:
- The dealer or broker could set the interest rate to increase their commission (known as discretionary commission arrangements)
- The commission on your agreement was particularly high (for example, 39% of the total cost of credit or 10% of the loan value)
- The broker or dealer restricted your choice of lender, such as favouring one lender or giving them priority
Important Deadlines
The FCA has confirmed key dates for compensation:
- Customers likely to be owed money may be contacted by lenders:
- By 31 December 2026 (for agreements from April 2014 onwards)
- By 28 February 2027 (for earlier agreements)
- If you are not contacted, you may still make a claim by:
👉 31 August 2027
Customers also have the option of pursuing a claim through the courts instead of the FCA scheme.
What Should You Do Next?
If you believe you may have been affected:
- Review your car finance agreement
- Consider whether key information was disclosed
- Submit a complaint to your lender
Seeking legal advice can help you understand your position and ensure your claim is handled effectively.
✦ Q&A: Car Finance Compensation Scheme ✦
Who can claim compensation under this scheme?
Anyone who took out a motor finance agreement between April 2007 and November 2024 and was not given clear information about commission or lending arrangements.
Do I need to wait to be contacted?
No. You can make a complaint yourself if you believe you may have been affected.
How much compensation could I receive?
The FCA estimates the average payout to be around £830, but this will depend on your individual circumstances.
What is a discretionary commission arrangement?
This is where a broker or dealer could set the interest rate on your finance agreement to increase their commission.
Can I take legal action instead of using the scheme?
Yes. You may choose to pursue your claim through the courts if appropriate.
Contact Us
If you believe you may be entitled to compensation in relation to a car finance agreement, obtaining legal advice can help you understand your options and maximise your claim.
Willett & Co Solicitors provide clear, practical advice on consumer claims and financial disputes.
📞 01284 701323
✉ law@willettsolicitors.com
📍 18 Angel Hill, Bury St Edmunds, Suffolk, IP33 1XQ