Money Matters: Find out if you're eligible for car finance compensation

In this week’s Money Matters column, Housing Plus Group’s debt and energy manager Dan Bebbington, looks into the latest development in the car finance mis-selling scandal and whether you could be due compensation.

Payments averaging £700 could soon be on their way to the millions of people caught up in the car finance mis-selling scandal.

The latest development could be good news for you if you bought a car on finance between 2007 and November 2024. Lloyds estimates that nearly half of finance agreements taken out during this period will be eligible.

The bulk of payments will be to customers affected by ‘discretionary commission arrangements’ (DCAs) – where dealers and brokers applied inflated interest rates to car finance deals in exchange for higher commission.

Although this was banned in 2021, millions of customers may have paid over the odds without realising.

There are smaller groups of customers who were charged unfairly high commission, and/or took out finance with a lender their car dealer was tied to, rather than being offered the best available deal.

Industry regulator the Financial Conduct Authority (FCA) investigated last year and concluded there was widespread evidence of poor practice, and now it’s announced the details of a major redress scheme to compensate those affected.

Following a consultation, it’s expected that lenders will start contacting affected customers early in 2026.

The whole thing is reminiscent of the PPI scandal, and will be a costly lesson learnt for lenders who have set aside billions to cover the expected payments.

They will be tasked with identifying and contacting those affected, meaning the burden is not on the customers themselves to complain. This is good news and will mean people are less likely to miss out if they didn’t know they were affected, or haven’t complained for some other reason.

However, I would still urge affected customers to get a complaint in, if you haven’t already, so that you’re ready and waiting in the queue.

Complaints should be made directly to your lender rather than the dealer, and do it yourself rather than using a fee-charging claims management company.

You can do this if you are still making repayments, or if your finance agreement ended within the last six years. You can also make a claim on behalf of someone who has since passed away.

You could be due compensation if you took out a personal contract purchase (PCP) agreement, but personal contract hire (PCH) deals are not included.

If you can’t remember who your lender was, you can check your credit report for free and then contact the lender to ask for a copy of the agreement.

23rd October 2025