Britons who suspect they were sold car finance unfairly between 2007 and 2024 may be eligible for compensation averaging around £1,400 per customer**.
Under a proposed compensation plan by the Financial Conduct Authority (FCA), car purchasers could collectively receive over £8 billion* in payouts. The FCA revealed that banks and car manufacturers’ finance divisions might have to disburse billions in compensation to affected car buyers who were not properly informed about undisclosed commissions paid to brokers, typically car dealers, between April 2007 and November 2024.
The estimated compensation sum includes £8.2 billion*, and individuals who believe they fall within the mis-sold car finance timeframe can reach out to Locksley Law for a complimentary agreement check with no obligations.
Financial institutions are preparing for substantial payouts, with Close Brothers allocating £165 million, Santander earmarking £295 million, and Lloyds, notably through its Black Horse brand, setting aside £1.95 billion. Car manufacturers like Mercedes-Benz and BMW have also allocated over £500 million each for potential compensation payouts.
The car finance scandal unfolded when it was discovered that some lenders were paying undisclosed commissions to dealerships, enabling dealers to manipulate finance agreement interest rates to earn higher commissions. This practice led to customers unknowingly agreeing to finance deals with inflated interest rates.
An investigation by the FCA identified that 44% of car finance agreements sold between April 2007 and November 2024 lacked proper disclosure, rendering them unfair. The regulator stated that motor finance companies violated laws by withholding critical information, resulting in consumers being deprived of the opportunity to negotiate better terms and potentially paying more for their loans.
After a 2024 Court of Appeal ruling raised the specter of substantial compensation liabilities for lenders, the Supreme Court overturned most of the judgment in August of the following year, reducing lender liabilities significantly. Consequently, the FCA is expected to formulate the rules for an anticipated redress scheme.
Under the proposed FCA redress scheme, lenders may be compelled to disburse £8.2 billion*, with some projections reaching up to £11 billion*. Affected customers might receive an average compensation of approximately £700* per claim.
Since Locksley Law commenced operations in October 2025, their clients have submitted an average of more than two claims each. Based on FCA estimates, each claim could yield up to £700*, translating to a potential average payout of £1,400** per client.
Individuals who suspect they were unfairly sold a car finance agreement between April 2007 and November 2024 may be eligible to file a claim. The proposed FCA redress scheme, set to launch in 2026, will offer a no-cost option for affected individuals, though participation remains voluntary. Consumers retain the option to pursue legal recourse through the court system if they wish.
For those preferring to utilize the FCA scheme, the regulator provides a template letter on its website for affected drivers. The FCA website also offers guidance for individuals who believe their car, motorcycle, or van finance agreement was mis-sold during the relevant period. Once the scheme is operational, lenders will contact eligible customers with further instructions.
*FCA estimates as reported by the FCA.
**Based on the most recent data (March 2026), Locksley Law clients currently average 2.6 claims each, indicating potential compensation of £1,400 or more per client.
Locksley Law operates under RH Law Ltd, authorized and regulated by the SRA (No. 659355). Consumers have the option to address complaints directly to the lender or the Financial Ombudsman Service without charge. Solicitor fees, if utilized, typically range from 15% to 30% excluding VAT of any successful claim.
