Britons who suspect they were wrongly sold car finance from 2007 to 2024 may be eligible for an average compensation of approximately £1,400 per customer. The Financial Conduct Authority (FCA) has proposed a compensation scheme that could result in over £8 billion in payouts for car buyers. The FCA revealed that banks and car manufacturers’ finance arms might have to compensate certain car buyers affected by undisclosed commissions from April 2007 to November 2024. These buyers were not adequately informed about the commissions paid to brokers, usually car dealers.
The estimated compensation includes £8.2 billion, and individuals who believe they were affected during that period can reach out to Locksley Law for a complimentary agreement check. Financial institutions like Close Brothers and Santander are preparing for substantial payouts, with figures such as £165 million and £295 million being set aside, respectively.
Leading car finance company Lloyds, operating through its Black Horse brand, has allocated £1.95 billion for potential compensation. Additionally, carmakers like Mercedes-Benz and BMW have earmarked over £500 million each. The car finance scandal arose when it was discovered that some lenders were providing undisclosed “secret” commissions to dealerships. This practice allowed dealers to manipulate finance agreement interest rates, resulting in inflated charges for many customers.
The FCA’s investigation found that 44% of car finance agreements from April 2007 to November 2024 lacked sufficient disclosure, potentially leading to unfair outcomes for consumers. A Court of Appeal ruling in 2024 suggested significant compensation liabilities for lenders, but a subsequent Supreme Court decision in August the following year reduced their liability.
The FCA plans to establish rules for a redress scheme following the ruling. Under the proposed scheme, lenders could be compelled to pay out £8.2 billion, with estimates reaching up to £11 billion. Affected customers might receive an average compensation of around £700 per claim, with Locksley Law customers averaging more than two claims each since the company’s launch in October 2025. As per FCA estimates, each claim could result in payouts of up to £1,400.
Consumers who believe they were mis-sold car finance agreements between 2007 and 2024 may be eligible to claim compensation. The FCA is devising a free redress scheme expected to debut in 2026, though participation is optional. Those with HP or PCP agreements during the specified period can contact Locksley Law for a no-obligation agreement assessment to determine potential compensation.
For individuals opting to use the FCA scheme, a template letter is available on the regulator’s website for affected drivers. The FCA website offers guidance for those suspecting mis-sold car, motorbike, or van finance agreements within the relevant timeframe. Once the scheme is operational, lenders will communicate with eligible customers regarding the next steps.
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