Volkswagen and Stellantis Count the Cost of Car Finance Claims
Rising car finance claims provisions put Volkswagen and Stellantis in the spotlight. Find out why both groups are setting aside more money.
If you’ve ever bought a car on finance, these numbers deserve your attention.
Volkswagen Financial Services UK has disclosed a £725 million provision for potential claims and compensation.
Stellantis’s UK finance business, behind brands including Vauxhall, Peugeot, and Fiat, has raised the amount it set aside from £37.1 million to £221.3 million.
The numbers are impressive and show how much these companies had underestimated the size of the redress scheme created by the Financial Conduct Authority. Stellantis increased the money set aside for compensation payments sixfold, while Volkswagen had been unable to estimate how much it might have to pay in 2024.
Of course, those are enormous sums. But before you start mentally spending a payout, there’s a distinction to understand: a provision is an estimate of a future bill recorded in a company’s accounts. It isn’t compensation already paid, and it doesn’t guarantee that every customer will get money.
Why might these companies need to compensate drivers?
The problem lies in the commissions dealers received for arranging car finance and whether those payments were properly explained to customers.
In some arrangements, dealers could earn more commission by increasing your interest rate. You could end up paying more each month without knowing the person arranging your loan had a financial incentive to make it costlier. Other cases involve particularly large commissions or undisclosed ties between dealers and lenders.
Customers challenged these deals, but lenders rejected many complaints. Some drivers then turned to the Financial Ombudsman Service, which sided with motorists in two key cases. Others took their claims to court.
In January 2024, the FCA stepped in to investigate how widespread the problem was and whether affected drivers should receive compensation.
How did we get here?
Following the review launched in January 2024, the UK regulator introduced final rules for a massive redress programme estimated at £7.5 billion. However, the original payment timeline has been delayed.
Here is the updated overview of the situation:
- Scheme Suspension: The Upper Tribunal has halted key parts of the compensation programme following legal action brought by major lenders (including Volkswagen Financial Services, Mercedes-Benz Financial Services, and CA Auto Finance) alongside the consumer group Consumer Voice.
- Upcoming Trial Dates: A case management hearing took place on 5 and 6 October 2026. The full trial to determine the legality and final framework of the scheme is scheduled to begin on 16 February 2027.
- Impact on Payouts: Banks and lenders are not currently required to calculate or settle compensation until these court disputes are fully resolved. If the scheme survives the legal challenges, the first payments are now expected to start later in 2027.
Before the court suspension, the FCA had structured the redress programme as follows:
- Scope: Approximately 12.1 million agreements signed between 6 April 2007 and 1 November 2024 would be eligible (roughly 40% of all car finance contracts from that period).
- Average Payout: The initial estimate puts individual compensation at around £830 per affected consumer.
- Eligibility Criteria: The primary focus remains on historical discretionary commission arrangements (DCAs), where car dealers artificially inflated interest rates to boost their earnings without the customer’s knowledge.
What you should do now
If you took out car finance between 6 April 2007 and 1 November 2024, you may be wondering whether your agreement is affected. It’s understandable to have questions, especially with so much still unsettled.
The first thing to do is use our eligibility checker to see whether you’re entitled to compensation. It will review your finance agreements and give you an initial assessment.
If you’re entitled to a payment, you can complain directly to your lender for free. However, if you’d rather have someone handle the paperwork, deal with the finance provider, and keep track of your claim, contact us to find out how we can help.
Lenders underestimated the cost of the compensation scheme. Don’t underestimate your rights. Get in touch to take the next step.
