Over 14m Agreements Could Be Reviewed Under FCA Compensation Plan

Published: 8th October 2025

The scale of the UK’s car finance scandal is finally coming into focus.

According to the Financial Conduct Authority (FCA), more than 14 million car finance agreements may have been affected by hidden broker payments and unfair interest rates —and a new national compensation plan aims to put that right.

If approved, the plan would cover agreements made between 2007 and 2024, potentially returning billions of pounds to drivers who were unknowingly overcharged.

Based on the FCA’s central estimate, the total cost of compensating affected drivers is expected to reach around £8.2 billion, rising to nearly £10 billion if every eligible consumer takes part. When administrative and operational costs are included, the overall financial impact on the motor finance industry could exceed £11 billion, placing this among the largest consumer compensation initiatives in UK history.

What Went Wrong

For years, many car buyers were steered into finance deals that weren’t as fair as they seemed. Brokers and dealerships often earned extra money based on how high they set a customer’s interest rate, a practice known as a discretionary commission arrangement (DCA).

In plain terms, the higher the interest rate, the bigger the broker’s payment. Most drivers were never told about this, and many ended up paying far more for their cars than they should have

The Financial Conduct Authority banned DCAs in 2021, but by then millions of agreements had already been affected. The 2025 Supreme Court ruling in Johnson v FirstRand confirmed what many suspected: that these undisclosed payments likely created unfair relationships under the Consumer Credit Act. That ruling gave the FCA a clear mandate to act.

What the FCA Is Proposing

The FCA’s proposal sets out a structured compensation framework to address these cases fairly and consistently. Each lender will be responsible for reviewing past agreements and contacting affected customers, but the process may take time and could vary from one firm to another.

Having the right guidance can make things simpler. Our team keeps track of every update from the FCA and helps drivers understand what to expect, what evidence to keep, and how to make sure their agreement is properly reviewed when the process begins.

How Many Drivers Are Expected to Claim

The FCA believes awareness will be high once the plan begins, and the scale of what’s coming is enormous. More than 14 million car finance agreements are expected to fall within the scope of the proposed compensation framework.

Out of those, the FCA expects around 85% of eligible drivers to take part. If that projection proves accurate, this would rank among the largest consumer redress programmes in UK history, second only to PPI in both scale and public impact.

When There Is No Unfair Relationship

Not every car finance agreement will qualify for compensation. The FCA’s proposal focuses on cases where a discretionary commission arrangement or a contractual tie between the broker and the lender made the deal unfair to the consumer.

If your broker didn’t have the power to adjust your interest rate, or if the commission was properly disclosed before you signed the agreement, it’s less likely that your case will be considered unfair under the Consumer Credit Act. Some finance arrangements were transparent, with fixed rates and clear terms that didn’t allow brokers to profit by increasing costs for customers.

However, because the rules and commission structures varied widely across lenders and dealerships, it can be hard to tell whether an agreement falls into that category. That’s why it helps to have someone review your paperwork or check directly with the finance provider. Even small differences in how your deal was arranged could affect whether you qualify for redress.

What Drivers Should Do Now

While the FCA’s proposal is still under consultation until 18 November 2025, it makes sense to prepare early. If you financed a car through a broker or dealership at any point between 2007 and 2024, your agreement might fall within the scope of this compensation framework.

Keep any paperwork, loan statements, or dealership documents you still have, and note the name of the finance company that provided your loan. Even if you no longer have all the details, specialist firms can often trace your agreement.

Our team is already reviewing contracts and monitoring the FCA’s next steps closely. We can help you find out whether your car finance was affected and guide you through what happens once the compensation process begins (probably early 2026).

A Turning Point for Car Finance

For too long, car finance was marketed as transparent and competitive when, in reality, many deals were quietly stacked against consumers. The FCA’s plan could finally change that, bringing long-overdue fairness, accountability, and compensation to millions of drivers who were kept in the dark.

If you took out a car finance agreement between 2007 and 2024, now is the time to check whether you’re entitled to compensation.