Individuals in the UK who suspect they were provided with car finance under misleading terms between 2007 and 2024 could potentially receive compensation averaging around £1,400 per customer**.
A proposed compensation scheme by the Financial Conduct Authority (FCA) could see car buyers collectively receiving over £8 billion* in payouts. The FCA has suggested that financial entities linked to banks and car manufacturers may need to disburse billions to rectify the situation for some car buyers affected by undisclosed commissions from April 2007 to November 2024. These buyers were not adequately informed about the commissions that lenders paid to brokers, typically car dealers.
The estimated compensation amount includes £8.2 billion* in total. If you suspect that you might fall under the category of individuals who were mis-sold car finance during that timeframe, you have the option to reach out to Locksley Law for a complimentary agreement check with no obligations.
Banks are preparing for substantial compensation payments, with Close Brothers having allocated £165 million and Santander £295 million for potential compensation costs, as reported by Reuters.
Leading car finance company Lloyds, under its Black Horse brand, has set aside £1.95 billion, according to the BBC. Additionally, automotive giants like Mercedes-Benz and BMW have reserved more than £500 million, according to the Financial Times.
In anticipation of the significant payouts, we have addressed some common inquiries you may have.
The car finance scandal surfaced when it was discovered that certain lenders were offering undisclosed “secret” commissions to dealerships. This practice allowed dealers to manipulate 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 charges.
An investigation by the FCA revealed that 44% of car finance agreements sold between April 2007 and November 2024 might be deemed unfair due to inadequate disclosure. The regulator stated that motor finance companies violated laws and regulations in place at the time by failing to disclose crucial information, leading to unfair circumstances where consumers were deprived of the opportunity to negotiate for better terms and, in some cases, paid more for their loans.
A 2024 ruling by the Court of Appeal raised concerns about significant compensation obligations for lenders, with estimates from the industry suggesting potential costs reaching up to £44 billion. However, a substantial portion of that ruling was overturned by the Supreme Court in August of the following year, significantly reducing the liability for lenders.
Following this development, the FCA is now tasked with formulating the regulations for a forthcoming redress scheme.
Under the proposed FCA redress scheme, lenders could be mandated to disburse £8.2 billion*, with some projections indicating figures as high as £11 billion*. Affected customers may expect an average compensation of approximately £700* per claim.
Since its establishment in October 2025, Locksley Law clients, on average, have submitted over two claims each. According to the FCA statement, individual claims could amount to £700*, resulting in an average potential payout of up to £1,400** per client.
Individuals who believe they were misled into a car finance agreement between April 2007 and November 2024 could be eligible to file a claim. This encompasses agreements falling under Hire Purchase (HP) and Personal Contract Purchase (PCP) categories meeting specific criteria:
If you suspect you were provided with misleading car finance, the FCA is planning a complimentary redress scheme set to launch in 2026.
However, participation in the scheme is not obligatory. Consumers retain the option to pursue legal action through the courts if they prefer. There is no compulsion to engage a law firm or claims management company to file a claim.
If you had a PCP or HP agreement between 2007 and 2024, you can engage Locksley Law for a free agreement assessment to determine if you are owed approximately £700* in compensation on average. For additional information, visit <a href