If you used finance to buy a car, the sensible response to the compensation headlines is neither to ignore them nor to sign a fee agreement in a hurry. The Financial Conduct Authority says some agreements may qualify for redress, but parts of its scheme are currently suspended because of a legal challenge.

That means there is no quick payout to chase. There is, however, a useful bit of housekeeping to do: work out whether your agreement is the right type, find the lender and complain directly if you may be affected. That route is free.

What has happened to car finance compensation?

The FCA says people who used motor finance between 6 April 2007 and 1 November 2024 may be owed compensation where important information about certain lender and broker arrangements was not properly disclosed. Its consumer guidance estimates that around 37% of agreements from the relevant period may be eligible, but that is not a promise that every customer will receive money.

The scheme has been legally challenged and parts are suspended. The FCA says the hearing is due to take place from 16 to 26 February 2027, with a judgment expected in the following months. Until that process ends, lenders do not have to calculate or pay compensation under the scheme. If it is upheld and there is no appeal, the regulator expects payments to begin in 2027.

In other words, a complaint can still be worth making, but an advert promising a fast settlement is not describing the current position.

Start with the agreement type

Look for the title on your paperwork, account emails or old bank records. The FCA’s scheme can cover hire purchase agreements, including Personal Contract Purchase, usually shortened to PCP. A Personal Contract Hire agreement, usually called PCH, is a lease and is not included in the scheme.

It is easy to call every monthly car payment “finance”, but the distinction matters here. Do not rely on the dealer’s advert or a vague memory of the deal. Find the agreement name before contacting anyone.

Who may be in scope?

The issue is not simply whether you borrowed money for a vehicle. The FCA is looking at whether the customer was not told about particular arrangements between the lender and broker. The broker may have been a dealer or another business that arranged the loan.

The arrangements described by the FCA include discretionary commission arrangements, high commission arrangements and certain contractual ties. There are exclusions and exceptions, so this is not a do-it-yourself decision on whether compensation is guaranteed. It is a reason to ask the lender to assess the agreement.

Agreements for cars, vans, motorcycles and campervans can be relevant. The vehicle does not need to be still owned, and an agreement that was settled early may still be worth checking.

The five-minute file check before you complain

Gather what you can before you start. The lender should be able to search without every detail, but a clearer request is less likely to go astray.

  • The lender’s name, which may not be the dealership’s name
  • Your name and address at the time of the agreement
  • The approximate start date
  • The registration number, make and model if you have them
  • The agreement number, if it appears in old emails, statements or paperwork

If you do not know the lender, the FCA suggests checking old paperwork, bank statements and your credit file. Do not send identity documents to a company that contacted you out of the blue just because it says it can trace an old agreement.

Complain to the lender, not a claims advert

The FCA’s advice is to complain to the lender. You can do that free of charge, and you do not need a claims management company or a law firm to find out whether you may be eligible. A short request is enough: say you want to complain about possible undisclosed commission on your motor finance agreement and include the information you have.

Using a representative is a personal choice, but check the fee before signing anything. The FCA warns that claims firms or law firms can charge up to 36% including VAT from compensation. A direct complaint leaves that money in your control if redress is ultimately due.

Keep expectations realistic on timing

For now, a complaint is about putting your case to the lender, not securing an immediate payment. The FCA says lenders do not have to calculate or pay scheme compensation while the legal process continues.

If you receive a redress determination later and think it is wrong, the FCA says you can take the matter to the Financial Ombudsman Service, which is free. Pay attention to the deadline in the lender’s letter: the Ombudsman may be unable to help if you miss it.

Watch for the scams that follow the headlines

Compensation stories attract impersonators. Be cautious with unsolicited texts, calls and emails that ask for a fee, bank login, password or one-time security code. A lender may need bank details to make a payment much later, but it will never need your PIN or password.

Use contact details you find yourself, ideally from the lender’s own website or the FCA’s car finance complaints page. That page is also the right place to check the latest timetable, because this remains a live legal process.

The practical bottom line

If you had HP or PCP between 6 April 2007 and 1 November 2024, locate the lender and agreement type, then complain directly if you have concerns. Do not assume every agreement qualifies, confuse PCP with PCH, or pay someone a large cut to do basic admin.

The value in acting now is getting the complaint on record and keeping your own paperwork straight. The value in waiting is avoiding promises that the regulator itself cannot yet make.