How to Claim Car Finance Compensation in 2026 — Complete Guide
Updated April 2026 · 10 minute read
Millions of UK drivers were sold car finance with hidden commission arrangements that inflated the cost of their loans. The Financial Conduct Authority (FCA) has now established a formal redress scheme to ensure affected consumers receive fair compensation. This guide explains everything you need to know about making a claim.
What is the FCA Motor Finance Redress Scheme?
The FCA Motor Finance Redress Scheme (formally known as PS26/3) is a regulatory framework introduced by the Financial Conduct Authority to address widespread mis-selling of car finance products in the UK. The scheme was prompted by the landmark Supreme Court ruling in Hopcraft v Close Brothers [2025] UKSC 33, which found that discretionary commission arrangements (DCAs) between lenders and car dealers created an inherent conflict of interest.
Under DCAs, car dealers had the power to set or influence the interest rate on your finance agreement. The higher the rate they set, the more commission they earned. This meant dealers were financially incentivised to charge you more than necessary — without telling you about it.
The FCA banned DCAs in January 2021, but the redress scheme covers agreements going back to 2007. If you took out car finance through a dealer during this period, you may be owed compensation for the extra interest you paid due to these hidden commission structures.
Who is Eligible?
You may be eligible to claim if all of the following apply:
- You took out a PCP (Personal Contract Purchase), HP (Hire Purchase), or conditional sale agreement to finance a vehicle.
- The finance was arranged through a car dealer (not directly with a bank or lender).
- The agreement was entered into between 2007 and January 2021.
- You were not clearly told about the commission the dealer would receive, or the dealer had discretion to set or influence your interest rate.
It does not matter whether the finance is still active or has been fully repaid. Both current and historic agreements are covered by the scheme.
How to Check Your Eligibility
The simplest way to check is to use our free eligibility checker. You will need to answer a few questions about your finance agreement:
- What type of finance did you have? (PCP, HP, or Conditional Sale)
- Was it arranged through a car dealer?
- When was the agreement signed?
- Who was the lender?
- Were you told about any commission the dealer would receive?
If you cannot remember these details, do not worry. Lenders are required to check their own records when they receive a complaint. Even partial information is enough to get started.
Step-by-Step Claim Process
Making a claim is straightforward. Here is the process from start to finish:
Step 1: Check Your Eligibility
Use our free checker to confirm your agreement type, lender, and approximate dates qualify under the FCA scheme. This takes about 2 minutes.
Step 2: Generate Your Complaint Letter
MoneyShield automatically generates a formal complaint letter tailored to your lender. The letter references the FCA redress scheme, the Supreme Court ruling, and requests full disclosure of any commission arrangements.
Step 3: Send to Your Lender
Send the complaint letter directly to your lender's complaints department. We provide the correct email address for each lender. You can send it yourself, or use our one-click send feature.
Step 4: Lender Investigation
Your lender must acknowledge your complaint within 5 working days. They then have up to 8 weeks to investigate and provide a final response. During this time, they will review your original agreement and any commission arrangements that were in place.
Step 5: Receive Your Decision
If the lender finds that a discretionary commission was paid, they must calculate the compensation owed. This includes the excess interest charged plus 8% simple interest per year from the date of the agreement.
Step 6: Payment or Escalation
If your complaint is upheld, payment should follow within 28 days. If the lender rejects your claim or you are unhappy with the offer, you can escalate to the Financial Ombudsman Service (FOS) for free.
What to Expect From Your Lender
When your lender receives your complaint, they will follow the process set out by the FCA:
- Acknowledgement: Within 5 working days, they must confirm receipt of your complaint.
- Investigation: They will review your original finance agreement, the commission structure in place at the time, and whether adequate disclosure was made.
- Final Response: Within 8 weeks, they must issue a final response letter. This will either uphold your complaint (with a compensation offer) or reject it (with reasons).
- Payment: If upheld, compensation is typically paid by bank transfer or cheque within 28 days of acceptance.
Some lenders have been proactively contacting customers to offer redress. However, the FCA has noted that many consumers will need to submit a complaint to receive their compensation. Do not wait for your lender to contact you.
Timeline: How Long Does It Take?
The overall timeline depends on your lender and the complexity of your case. Here is a typical timeline:
If your lender does not respond within 8 weeks, or you are unhappy with their decision, you can refer the matter to the Financial Ombudsman Service. FOS cases typically take 3-6 months but can result in higher compensation awards.
Frequently Asked Questions
Who is eligible to claim car finance compensation?
Anyone who took out a PCP, HP, or conditional sale agreement through a car dealer between 2007 and 2021 may be eligible. The key factor is whether the lender paid a discretionary commission to the dealer that was not disclosed to you.
How much compensation could I receive?
Compensation varies based on the commission paid, the finance amount, and how long ago the agreement was. Typical payouts range from a few hundred pounds to several thousand. The FCA scheme also adds 8% simple interest per year on the overcharged amount.
Do I need my original finance agreement to claim?
No. While having your original paperwork helps speed things up, lenders are required to search their records using your name, date of birth, and approximate dates. You can still claim without any documents.
How long does the claim process take?
Under the FCA redress scheme, lenders have a defined timeline. They must acknowledge your complaint within 5 working days and provide a final response within 8 weeks. If they uphold your complaint, payment should follow within 28 days of their decision.
Is there a deadline to claim?
The FCA has set a deadline for complaints under the redress scheme. It is important to act promptly. The scheme covers agreements from 2007 onwards, but the window to submit complaints will not remain open indefinitely. We recommend starting your claim as soon as possible.
Can I claim if I have already paid off the finance?
Yes. Whether your finance agreement is still active or fully settled, you can still claim. In fact, the majority of successful claims are from agreements that have already ended.
Will claiming affect my credit score?
No. Submitting a complaint about hidden commission does not affect your credit score. It is a consumer rights matter, not a credit application.
Do I need a solicitor or claims management company?
No. You can submit a complaint directly to your lender for free. MoneyShield generates the complaint letter for you at no cost. Claims management companies typically charge 15-30% of any compensation received.
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