Car Finance Claims: What’s the Background and Can You Claim?
Discover everything you need to know about car finance claims, one of the biggest consumer scandals the UK has ever seen. Learn whether or not you can make a car finance claim and how steps are being taken to compensate millions.
Last Updated: 8th August 2025
Am I Eligible? — How Long Does it Take? — Will Claiming Have Negative Effects?
Claiming Yourself vs Law Firm — Holding Lenders Accountable — Start Your Claim
Unfair commission models, excessive commission fees and the absence of proper affordability assessments stand as stark examples of the tactics employed by unethical lenders to take advantage of those looking to purchase a vehicle.
How can we prevent them from continuing these harmful actions and damaging consumers’ trust in the car finance industry? The solution lies in pursuing a claim against the finance providers. This guide covers everything you need to know about car finance claims, from how to find out if you’re eligible to a timeline of key milestones so far. This is a rapidly evolving situation, and details are changing frequently, so please check back regularly for new updates.
Am I Eligible to Make a Car Finance Claim?
Most car finance claims involve agreements with discretionary commission arrangements (DCAs). Therefore, if you bought a car on PCP or HP finance between April 2007 and January 2021, and your agreement involved a DCA, you will likely be eligible. Following a recent Supreme Court hearing and a subsequent update from the Financial Conduct Authority (FCA), the likelihood of consumers receiving compensation due to discretionary commission has increased significantly.
The discretionary commission model meant that the customer paid an inflated interest rate, allowing the dealer to earn a higher commission. It has been deemed an unfair practice and has therefore been banned by the FCA since 2021.
The Supreme Court ruling means that any commission deemed excessive, not just DCAs, may also be due compensation. We will know more about this when the FCA publish details on its redress scheme in early October 2025.
How Long Does the Claims Process Take?
The FCA is currently investigating the mis-selling scandal within the car finance industry. Following the Supreme Court’s decision in August 2025, we anticipate that the claims process will accelerate, ensuring that consumers who paid either a discretionary or excessive commission are rightfully compensated. The FCA is consulting with various stakeholders as it aims to compensate consumers who have lost out while ensuring the integrity of the market.
The FCA plans to publish its consultation on a redress scheme in early October 2025. When this arrives, we will have more information about the specifics of how the scheme will operate, including when consumers can expect to receive compensation and how it will be calculated. The FCA is aiming for payouts to start arriving in 2026.
Claiming Yourself vs Using a Firm
You have two options when making a car finance claim and getting back the money you’re owed if you were mis-sold your agreement. You can either go it alone or enlist the help of a trusted law firm or claims management company (CMC). Both paths can lead to compensation if done correctly, but understanding the differences will help you decide which is best for your situation and ensure a smooth process.
If you decide to start the claim yourself, you won’t have any fees to pay and will keep 100% of your compensation. It means you can also manage the pace of the process and organise all correspondence. However, financial regulations and legal work can be complex. A small mistake in your paperwork could delay or jeopardise the claim. Claims can also be time-consuming and take more effort than it’s worth to gather supporting documents and communicate with the relevant organisations. If you decide to file a claim, the first step is to contact the lender with your complaint. If your complaint is rejected or you aren’t satisfied with the response, you can refer it to the Financial Ombudsman Service (FOS) yourself for free.
If you use a law firm or a claims management company, you can rest assured that they will have expertise in financial mis-selling cases, knowing how best to frame your complaint and what evidence is needed to present the best possible case. The firm’s team will handle many of the time-consuming tasks, such as collecting documents, drafting submissions, and communicating with your lender(s), freeing you to focus on your day-to-day life. Most reputable firms will work on a No Win, No Fee basis* Read more , meaning you will only pay if the claim is successful. Using a law firm or a CMC means that a pre-agreed percentage will be deducted from your compensation, and you may have less direct control over timelines and processes.
The decision of whether to claim yourself or use a firm is entirely up to you. You can use the information above to help you weigh up the pros and cons.
Will Making a Claim Have Any Negative Effects?
We understand that people often have doubts about whether to make a claim against financial mis-selling for various reasons, such as believing it would be a waste of time or worrying about potential negative consequences. Firstly, consumers might not think they have a case or lack awareness about how mis-selling has occurred. However, by going to a law firm or claims management company, you will receive comprehensive advice about your situation and how you have been affected. Similarly, many are worried about the costs involved. However, you won’t be charged a penny unless your case is successful, if they work on a No Win, No Fee* Read more basis. Therefore, you can submit a claim knowing that you won’t have to pay their fees unless you receive your PCP compensation.
Another reason people delay claiming is that they believe it will take more time and effort than it’s worth. While the claims process can sometimes be lengthy and complex, the FCA is currently investigating car finance claims, and it hopes a redress scheme will result in payments starting in 2026. One of the benefits of choosing a claims management company is that they will deal with all the paperwork and evidence needed to submit your claim, removing any unnecessary stress, effort, or time constraints on your part. There is also often a social stigma attached to making a claim, but if you were mis-sold, it’s worth fighting to get your money back, win a bit of justice and prevent them from mis-selling to other consumers.
Finally, you may be concerned that submitting a car finance claim will negatively impact your relationships with your current or future lenders. It is not the case that you will be blacklisted for making a claim. While this could have occurred in the early 2000s, it has since been outlawed, and lenders are not permitted to blacklist you or treat you worse because you have complained. Likewise, your claim won’t be included in a product application assessment, so it won’t affect your chances of purchasing from a different lender.
Ultimately, car finance mis-selling isn’t a victimless scandal. Millions of motorists have lost money due to mis-selling, and we strongly believe in helping them recover their money. The benefits of claiming far outweigh any negatives.
Holding Car Finance Lenders Accountable
Car finance claims are crucial in holding dishonest companies accountable. They provide those seeking financing a voice against abusive practices. Consumers can create a support network by targeting companies that use these tactics and raising society’s awareness of the issue.
Moreover, filing a claim against a lender can lead to legal scrutiny of their practices. Courts and regulatory bodies can impose fines, demand compensation for affected consumers, and even revoke licenses in extreme cases. The threat of legal consequences serves as a deterrent against unethical behaviour.
Car finance claims often require investigation by regulatory bodies, which can lead to increased monitoring of the entire industry. These investigations can uncover systemic issues and lead to broader regulatory reforms, ensuring all lenders adhere to fair practices.
It’s also important to highlight that lenders are conscious of their reputation in the market. Companies sued for abusive practices against their clients have their reputations significantly damaged, which requires them to correct their course of action. They are forced to come forward to explain what happened and what they will do to ensure that unethical and potentially illegal activity ceases. In a competitive market, reputation can be a significant asset or liability, incentivising lenders to act ethically.
The financial ramifications of car finance claims, including compensation payouts and legal costs, directly affect lenders’ bottom line. The potential for economic loss can be a powerful motivator for companies to maintain fair lending standards to avoid lawsuits.
How to Start Your Car Finance Claim
If you find yourself in any of these situations, the first step is usually to contact your credit provider to discuss the issue. If you’re dissatisfied with their response, you can escalate the claim yourself for free using formal complaint channels, such as the Financial Ombudsman Service. You can also choose to speak with our team to understand your options and determine the best course of action.
Remember, the specific terms and conditions of your agreement, as well as the laws of your jurisdiction, will impact your ability to file a complaint. Use our free eligibility checker to see if you can claim. The check takes less than two minutes to complete.
