If you took out a car loan or finance agreement and suspect you may have been mis-sold, it’s crucial to act now. To move forward confidently, it is important to understand your rights, including potential claims for mis-selling under a looming compensation scheme. This article explains how to check if you were mis-sold, what finance firms are under investigation, how long claims take, and how much you could recover. Let’s begin by defining mis-sold car finance and how it might affect you.

What does “mis-sold car finance” mean?

In broad terms, mis-selling of car finance occurs when you were offered a finance agreement, such as a Hire Purchase (HP) or Personal Contract Purchase (PCP), but the transaction was unfair because:

• You were not fully informed about the commission arrangements between the lender and the dealer, which could have affected the interest rate you paid.
• You were charged higher interest (or other costs) due to a broker or dealer receiving extra commission without adequate disclosure.
• You were sold finance in a way that breached the rights and protections afforded by the Financial Conduct Authority (FCA) rules or the Consumer Credit Act 1974.

The FCA’s recent review found that many motor finance lenders did not comply with prior rules or disclosure obligations.

In particular, the concept of a discretionary commission arrangement (DCA), where brokers could adjust interest rates (within a range) and thereby increase their own earnings from a deal, is central to many mis-selling claims.

How do I find out if I was mis-sold car finance?

1. Locate your finance agreement documents

Start by retrieving the paperwork for your car finance deal: the agreement itself, the credit / loan schedule, any dealer disclosures or terms that mention commission or interest rate adjustments.

2. Check if your deal involved a PCP or HP agreement

If you entered a PCP or HP agreement (common for car finance in the UK), you may be more at risk of mis-selling if:

• You signed the deal before January 2021 (as many DCAs were banned after that date).
• The dealer or broker was able to select your interest rate from a range and/or was paid a higher commission for setting a higher rate.
• You were not informed about the amount the dealer/lender was paid in commission (or not informed at all).
• You believe you were charged a higher rate than advertised or than similar borrowers of similar credit risk.

3. Use online tools and check the complaints data

Sites such as MoneySavingExpert.com report more than 2.5 million complaints about DCAs filed.

You can submit a complaint to your lender asking them to review your deal for DCA or commission issues. Keep your reference number.

4. Ask your lender directly

Write to your lender and ask:

• Whether your agreement involved a discretionary commission arrangement.
• How much commission the dealer received, and whether it was disclosed to you.
• Whether the lender is participating in any upcoming compensation scheme.

5. Check for signs of unfair treatment

If your interest rate was significantly higher than that of other comparable customers, or if the paperwork contained unclear or hidden references to dealer commission, you might have been mis-sold.

Which car finance companies are being investigated in the UK?

The investigation encompasses a broad range of motor finance lenders and broker arrangements. The FCA’s review and consultation apply to all firms that offer motor finance to UK consumers.

Some of the major lenders flagged in reporting include:

• Lloyds Banking Group (via its car-finance arm): set aside large provisions against the risk of mis-selling.
• Close Brothers Group: similarly exposed and named in regulatory commentary.
• Santander UK, among others.

No single firm list is publicly endorsed by the FCA as “under investigation” per se, but the industry-wide compensation scheme will apply to eligible agreements issued by all relevant lenders.

If your finance agreement was through one of the major car-finance brokers or dealer-arranged deals, there is a higher chance it falls within scope.

How long do motor finance claims take?

Complaints to your lender

If you submit a complaint directly to your lender, timeframes can vary. The lender must acknowledge your complaint and respond within regulatory timescales (usually up to 8 weeks). However, many complaints linked to discretionary commission are being held until the FCA scheme is finalised.

Industry-wide compensation scheme

The FCA has announced that a consultation will be published by early October 2025 and that eligible customers could begin receiving payments from 2026.

In other words:

• 2024-25: Gathering of complaints, investigations, and preparation.
• Summer-Autumn 2025: Consultation published.
• 2026 onwards: Claims begin to be paid under the redress scheme.

It may therefore be months to over a year before you receive a payout, as this is a large-scale industry programme. In the meantime, you can expedite the process by submitting your complaint now and retaining all relevant documentation.

How do I know if my car finance had a discretionary commission arrangement?

A discretionary commission arrangement (DCA) typically presents the following characteristics:

• The dealer or broker had the ability to choose or vary the interest rate (within a zone) from a list provided by the lender.
• The dealer’s commission increased if the interest rate set for you was higher (even though you could have accessed a lower rate).
• There was no clear disclosure to you about how the dealer’s commission was calculated or that you were paying higher interest to pay for it.
• The agreement was entered into before January 2021 (when the FCA banned DCAs in motor finance) and/or before disclosures required by the FCA were strengthened.
• Your interest rate appears to be out of line with what people of a similar credit status were paying.

If your documents show any wording like “broker commission”, “dealer fee”, “additional margin”, “commission paid to broker”, or if you were offered a finance rate higher than advertised without a clear explanation, that is a warning sign.

You can ask your lender:

• Was there a DCA in your agreement?
• If yes, how much was the dealer or broker paid in commission?
• Was that commission disclosed to you before you signed?

Can I claim car finance compensation myself?

Yes, you can absolutely make a claim yourself. In fact, the FCA has explicitly stated that the forthcoming industry-wide redress scheme will aim to be accessible without needing a claims management company (CMC) or lawyer.

A few key points:

• Using a CMC or law firm is not necessary and may reduce the amount you receive, as fees can take up to 30% of any award.
• Keep all documentation, ensure your complaint is submitted formally to the lender, and request written acknowledgement.
• Even if you have already used a CMC, you can still manage the complaint directly or track the scheme when it launches.
• Be wary of cold calls or emails from firms claiming “you are entitled to thousands”, the FCA has warned about aggressive or misleading marketing.

In summary, yes, you can claim yourself, and given the scale of the forthcoming scheme, this may be the simpler and more cost-effective route.

How much will I get back from a discretionary commission arrangement?

Estimating compensation is difficult until the scheme’s rules are finalised, but the available guidance gives a realistic expectation:

• The FCA has projected that most individuals will probably receive less than £950 per agreement.
• More recent estimates suggest an average payout of around £700 for affected loans.
• The total industry cost is expected to lie between £9 billion and £18 billion, depending on design and eligible volume.
• The redress will likely reflect the size of the undisclosed commission (and its impact on you), plus interest (the FCA suggests a simple interest rate of about 3% per annum may apply).

So, while you should not expect thousands in every case, you could receive a meaningful amount, especially if your interest rate was significantly marked up because of undisclosed commission.

Why the regulatory context matters

The FCA has laid out its plan for a compensation scheme for motor finance customers:

• It found many firms had not complied with rules on disclosure of commission arrangements.
• The FCA’s consultation, expected in early October 2025, will guide how firms should assess whether a relationship with a borrower was “unfair”, what compensation should be paid, whether an opt-in or opt-out approach is used, and how interest should be calculated.
• The overarching principles include fairness, timeliness, comprehensiveness, simplicity, cost-effectiveness, and market integrity.
• A landmark case before the Supreme Court of the United Kingdom in August 2025 clarified some aspects of the law on commission disclosure.

Given this regulatory backdrop, it’s essential to act now by submitting complaints, gathering documents, and staying informed, as the next phase (payments under the scheme) is imminent.

Summary: Steps you should take now

1. Check your finance agreement: retrieve your paperwork and assess whether there’s evidence of undisclosed commission or rate manipulation.
2. Submit a complaint to your lender: even if you’re waiting for the scheme, getting your case registered now helps.
3. Gather evidence: such as the interest rate you paid, comparable rates at the time, disclosures you received, and documents showing dealer/broker commission.
4. Avoid fees unnecessarily: you don’t need to pay a claims management company to claim; doing it yourself could maximise your compensation.
5. Monitor the FCA scheme: keep an eye on announcements from the FCA so you know when payments begin and what your rights are.
6. Use the comparison tools: while existing claims are being processed, ensure that your future car finance deals (or other insurance products) are entered via comparison, as this may protect you from past mis-selling.

FAQs

What is a mis-sold car finance claim?

A mis-sold car finance claim relates to a situation where your car finance agreement (for example, a PCP or HP) was arranged or sold to you in a way that was unfair, lacked proper disclosure, or included arrangements that allowed the broker or dealer to receive hidden or undisclosed commission or to inflate the interest rate without your knowledge. In short, if you paid more than you should have because of unfair practices, you may have a claim.

How do I check if my car finance was mis-sold (or if I was mis-sold car finance)?

You can check by reviewing your finance agreement and related documentation for signs such as:

• The finance agreement is a PCP or HP contract.
• The agreement was entered into prior to 28 January 2021 (after which the main arrangement of discretionary commission was banned).
• There was no clear disclosure that the dealer or broker received a commission that might have affected the rate you paid.
• You were offered a higher interest rate than seems typical for your credit profile, or you believe you could have qualified for a lower rate.
• The documentation shows wording around “broker commission”, “dealer fee”, “additional margin”, “interest rate set by dealer/broker”, etc.

If you spot one or more of these signs, you may proceed further and lodge a formal complaint with the lender.

What is a discretionary commission arrangement (DCA), and how can I determine if I have one?

A discretionary commission arrangement is one where the broker or car dealer has the power to set, or adjust, the interest rate offered to you (within a range), and where the higher the rate, the more commission the broker/ dealer receives from the lender.

You may know your deal had one if:

• Your agreement shows the dealer/broker was able to choose or vary the interest rate.
• There was no plain disclosure to you that such a commission might apply or that you were paying more so the broker could earn more.
• Your finance agreement was before the ban on DCAs (January 2021), but the dealer/ broker still looks to have been able to influence your rate.
• You believe that you paid more than you should have because the interest rate was higher.

Can I claim car finance compensation myself (without a claims company)?

Yes. You can make a complaint yourself directly to your lender about your car finance agreement if you believe it was mis-sold. The regulator, the Financial Conduct Authority (FCA), has signalled that the forthcoming redress scheme will allow consumers to make claims themselves, without needing to use claims management firms.

If you do choose to go through a claims management company or law firm, be aware they may charge a fee (often a portion of any refund), which could reduce what you get back.

In short, yes, you can claim by yourself; indeed, this is likely to give you the most refund, as long as you follow the process carefully.

How long do motor finance claims take?

It depends on how you proceed:

• If you submit a complaint directly to your lender, they are required to issue a final response within eight weeks under the FCA rules. But for complaints relating to DCAs, the FCA has paused time limits while it conducts its review.
• The FCA has extended the period for firms to respond to non-DCA commission complaints until at least December 2025.
• The industry-wide redress scheme is expected to launch claims payments in 2026, so even if you lodge your complaint now, it may be some time before you receive compensation.
• In summary: You should submit your complaint now (so you preserve your rights and get on the list). However, realistically, the full process may take several months, often up to a year or more for scheme-based claims.

How much compensation could I get from a discretionary commission arrangement?

The exact amount depends on your individual agreement (interest rate, duration, vehicle value, etc). Some key indicators:

• The FCA has suggested that in many cases, the refund may equate to the commission received by the dealer/broker (or full repayment of such) plus interest.
• Market estimates suggest that typical refunds for DCA-related deals might be less than £950.
• Given the scale of the industry and numbers involved, the total cost of a redress scheme is estimated to be up to £18 billion for the industry.
• While you should not necessarily expect thousands in every case, for many customers, the compensation is likely to be substantial but moderate, and you will need to wait for the scheme rules to be finalised.

Sources & References

1. Financial Conduct Authority: Statement on motor finance review: next steps
   https://www.fca.org.uk/news/statements/motor-finance-review-next-steps
2. FCA: Key considerations in implementing a possible motor finance consumer redress scheme
   https://www.fca.org.uk/news/statements/key-considerations-implementing-possible-motor-finance-consumer-redress-scheme
3. FCA: Consultation on compensation scheme for motor finance customers
   https://www.fca.org.uk/news/statements/fca-consult-compensation-scheme-motor-finance-customers
4. FCA: Car finance complaints: commission concerns
   https://www.fca.org.uk/consumers/car-finance-complaints
5. MoneySavingExpert: Car finance FREE reclaim tool & guide
   https://www.moneysavingexpert.com/reclaim/reclaim-car-finance/
6. Reclaim247: Mis‑sold car finance guide 2025
   https://www.reclaim247.co.uk/claims-guide/car-finance-mis-selling-your-2025-guide-to-compensation-and-claims/
7. Reclaim247: Discretionary Commission Arrangements: What You Need to Know
   https://www.reclaim247.co.uk/claims-guide/discretionary-commission-arrangements-what-you-need-to-know/
8. Womble Bond Dickinson: Motor finance commissions and lender liability: the story so far
   https://www.womblebonddickinson.com/uk/insights/articles-and-briefings/motor-finance-commissions-and-lender-liability-story-so-far
9. Bott & Co: Mis‑sold car finance claims
   https://www.bottonline.co.uk/mis-sold-car-finance-claims

Last reviewed: November 3rd, 2025

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