Millions of Drivers Face a 30 June Deadline to Claim Car Finance Payouts Worth £830

If you bought a car on finance between 2007 and 2024, you could be owed money, and a key deadline is now just weeks away. The Financial Conduct Authority has confirmed an industry-wide redress scheme covering 12.1 million motor finance agreements, with the average payout set at around £830 per agreement. The regulator expects about three quarters of eligible customers to claim, which would put roughly £7.5 billion back into drivers’ pockets. The single most useful thing most people can do is lodge a complaint with their lender before the implementation period ends, because complaining early means being paid sooner.

For loans taken out from 1 April 2014, lenders must be ready to handle complaints by 30 June 2026. For agreements made earlier, between 6 April 2007 and 31 March 2014, the date is 31 August 2026. You do not have to wait to be contacted, and you do not need to pay anyone to do this for you. Here is what the scheme covers, who qualifies, how much you might receive, and the exact steps to take.

What the FCA scheme actually covers

The redress scheme deals with motor finance loans where customers were not told clearly about commission paid to the dealer or broker who arranged the deal. The most common example is a discretionary commission arrangement, often shortened to DCA. Under these arrangements the dealer or broker could set the interest rate, and the higher the rate, the more commission they earned. Customers were rarely told this was happening, which meant they were denied the chance to shop around for a better deal and, in many cases, paid more than they needed to.

To qualify, you generally need to show that you were not clearly told one of three things. First, that your dealer or broker set the interest rate to earn more commission through a discretionary commission arrangement. Second, that the commission was high, defined by the FCA as at least 39 per cent of the total cost of credit and 10 per cent of the loan. Third, that the dealer or broker was tied to one lender or gave one lender first refusal, unless there were visible links between the lender and a manufacturer or franchised dealer, such as a shared name.

There are exceptions where a case is treated as fair and no payout is due. These include agreements where the commission was £120 or less for deals starting before 1 April 2014, or £150 or less from that date, because such small amounts are unlikely to have changed the broker’s behaviour. Loans where you were not charged any interest are also excluded, as are cases where a discretionary commission arrangement existed but was not actually used to earn extra commission. Very high value loans, those larger than 99.5 per cent of other loans taken out that year, sit outside the scheme too, although those customers can still complain to their lender and then the Financial Ombudsman Service.

How much money you could get back

The headline figure is an average of around £830 per agreement, but the way payouts are calculated means some people will receive more and some less. For most customers, compensation is built from two parts, then averaged. The first part is the commission that was paid on the agreement. The second is an estimated loss, worked out as a percentage discount of the interest you paid. The FCA uses 17 per cent of the interest for agreements from April 2014, and 21 per cent for earlier deals, reflecting the greater loss suffered on older agreements.

On top of that, interest is added to the compensation itself. This is set at the Bank of England base rate plus 1 per cent for each year, with a floor of at least 3 per cent in any given year. Where the commission was very high, defined as 50 per cent of the total cost of credit and 22.5 per cent of the loan, and another factor of unfairness was present, customers will receive the full commission that was paid.

The scheme is designed so that nobody ends up better off than they would have been had they been treated fairly. To keep it proportionate, the FCA expects payouts to be capped in around one in three cases. If you have several qualifying agreements over the years, each one is assessed separately, so the total you receive could be considerably more than the headline average. The regulator has tightened the eligibility criteria compared with its original proposals, but it also increased average compensation for older agreements and added the minimum 3 per cent interest rate.

What to do before the deadline

The clearest piece of advice is to complain now if you think you were treated unfairly. People who complain before the relevant implementation period ends will be dealt with sooner, and the 30 June 2026 date applies to the large group of agreements taken out from April 2014. Start by finding any paperwork you still have, including the finance agreement, the dealer invoice and any correspondence that shows the lender and the interest rate. If you no longer have the documents, your lender or the dealer should be able to confirm whether you had finance and which company provided it.

Complain directly to the lender that provided the finance, not the dealer. The FCA has published free guidance on how to complain on its website, and there is no need to use a claims management company or a law firm. This point is worth dwelling on, because a claims firm can take more than 30 per cent of any money you receive, which on an £830 payout would be well over £250 for work you can do yourself in an afternoon. The regulator has already removed or amended 800 misleading adverts and says more than 28,000 consumers have been able to exit contracts with claims firms free of charge.

Once the implementation period closes, lenders have three months to tell complainants whether they are owed compensation and how much. If you do nothing, your lender still has to contact you if you are likely to be owed money, within six months of the relevant deadline. That means people with post April 2014 agreements should hear by the end of 2026, and those with agreements from 2007 to March 2014 by the end of February 2027. Anyone who is not contacted but believes they have a claim has until 31 August 2027 to come forward. If you disagree with your lender’s decision, the Financial Ombudsman Service can review whether the scheme rules were followed.

Nikhil Rathi, chief executive of the FCA, said the scheme “will put £7.5 billion back into people’s pockets” and urged the industry to act quickly. “Now we need everyone to get behind it and ensure millions get their money this year,” he said. “Payouts should not be delayed any longer, especially as household bills come under greater pressure.”

Watch out for scams

A compensation scheme of this size is a magnet for fraudsters, and the FCA has warned drivers to be on their guard. You should never pay a fee to access compensation, and you should never share sensitive details such as your PIN or online banking passwords with anyone claiming to handle your claim. If you are contacted out of the blue, check that you are dealing with your genuine lender using the contact details listed on the FCA website, or through the regulator’s dedicated motor finance scams helpline. A genuine lender will not ask you to pay upfront to release money that is owed to you.

Car finance touches a huge share of UK drivers, with the vast majority of new cars and a large slice of used cars bought on some form of credit. That is why a scheme covering 12.1 million agreements reaches so deeply into ordinary household finances at a time when running a car is already expensive. If you want to understand the wider squeeze on motoring costs, our coverage of car insurance premiums and rising repair bills sets out where the money is going. And for another example of drivers being handed refunds after being charged unfairly, see what happened when a speed camera software fault led to thousands of wrongful fines.

The bottom line is simple. If you took out car finance between 2007 and 2024, it costs nothing to check, the process is free to use, and complaining before 30 June 2026 puts you near the front of the queue. With an average payout of £830 and many drivers holding more than one past agreement, a short complaint could be one of the better uses of an hour this summer.

Sources:

• FCA: Millions of car finance customers to get payouts this year
• FCA Policy Statement PS26/3: Motor finance consumer redress scheme
• FCA: Car finance claims guidance for consumers