British individuals who suspect they were sold car finance under misleading circumstances between 2007 and 2024 may qualify for compensation averaging up to £1,400 per customer**.
An estimated total of over £8 billion* could be disbursed to car buyers through a compensation program proposed by the Financial Conduct Authority (FCA), the watchdog for financial activities in the City. The FCA projected that financial branches of banks and automakers might have to allocate billions to compensate certain car purchasers affected by undisclosed commissions between April 2007 and November 2024. These buyers were not completely informed about the commissions paid by lenders to brokers, typically car dealers.
The anticipated sum includes £8.2 billion* designated for compensation. If you suspect you may be one of those affected by mis-sold car finance during that timeframe, you have the option to reach out to Locksley Law for a complimentary, non-binding agreement assessment.
Financial institutions are preparing for substantial disbursements, with Close Brothers setting aside £165 million and Santander earmarking £295 million for possible compensation costs, according to Reuters. Lloyds, a prominent car finance provider through its Black Horse division, has allocated £1.95 billion, as reported by the BBC. Additionally, automakers like Mercedes-Benz and BMW have reserved over £500 million, as detailed by the Financial Times.
Given the potential significant payouts, we have addressed common inquiries you may have.
The car finance controversy arose following the revelation that some lenders were making undisclosed “secret” payments to dealerships. This arrangement allowed dealers to set interest rates on finance agreements, with higher rates resulting in larger commissions for them. Consequently, many customers may have agreed to finance deals with inflated interest costs.
An investigation conducted by the FCA identified that 44% of car finance agreements sold between April 2007 and November 2024 might be deemed unfair due to insufficient disclosure. In a statement, the regulator declared that “motor finance companies violated laws and regulations in effect at the time by neglecting to disclose crucial information. This led to unfairness, with consumers being deprived of the opportunity to negotiate or secure a better deal and, in some cases, paying more for their loan.”
You can access the FCA report here.
A 2024 ruling by the Court of Appeal raised concerns about substantial compensation liabilities for lenders, with industry estimates suggesting potential costs of up to £44 billion. However, the Supreme Court overturned a significant portion of that ruling in August of the following year, reducing lender liabilities significantly.
In the aftermath of the ruling, the FCA is now tasked with formulating the guidelines for a forthcoming redress program.
Under the proposed FCA redress initiative, lenders may be obliged to disburse £8.2 billion*, with some estimates reaching up to £11 billion*. Affected customers could receive an average compensation of roughly £700* per claim.
Since its establishment in October 2025, Locksley Law customers have recorded an average of over two claims each. According to the FCA statement, each claim could potentially yield up to £700*, suggesting that an average client might receive a payout of up to £1,400**
Individuals who believe they were misled into a car finance agreement between April 2007 and November 2024 may be eligible to file a claim. This covers Hire Purchase (HP) and Personal Contract Purchase (PCP) agreements falling under specific categories.
If you suspect you were mis-sold car finance, the FCA is proposing a no-cost redress scheme expected to launch in 2026.
However, participation in the scheme is not obligatory. Consumers retain the option to pursue legal recourse through the courts. There is no obligation to file a claim through a law firm or claims management entity.
If you had a PCP or HP agreement between 2007 and 2024, you can engage Locksley Law for a complimentary, non-binding agreement review to explore potential compensation averaging £700*. Visit <a href="https://forms.locksleylaw.co.uk/dca