Car Finance Mis-Selling: Why Legal Support Matters in the FCA’s £8 Billion Compensation Scheme

What Is the FCA Redress Scheme?

The FCA is proposing a formal compensation scheme for consumers who were mis-sold car finance agreements - particularly where commission arrangements between lenders and brokers were not properly disclosed. The FCA is now consulting on how the scheme will work, with the consultation running until 11 November 2025.

The scheme is expected to launch in 2026 and could result in compensation for millions of consumers like you. If you’d like to read more about the FCA redress scheme, you can check out their website here.

While the FCA aims to make the process simple, the underlying legal and financial issues are complex. At Slater and Gordon, we believe that expert legal guidance can make a meaningful difference - especially for those unsure of their eligibility, who cannot locate paperwork or who are concerned about protecting their rights.

Understanding the Mis-Selling

At the heart of the issue are Discretionary Commission Arrangements (DCAs) - a now-banned practice where brokers could inflate interest rates to earn higher commissions, often without informing the customer. The FCA estimates that 14 million agreements may have been affected.

The scheme applies to a range of commission structures, including:

• Discretionary Commission Arrangements, where brokers were allowed to adjust your interest rate to increase their own commission.
• Fixed Commission Arrangements, which are also covered if the commission was particularly high or not properly disclosed. This includes cases where commission exceeded 35% of the total cost of credit or 10% of the loan.
• Exclusive Broker Relationships, where lenders had near-exclusive rights to offer credit through certain dealers, limiting consumer choice and potentially affecting fairness.

If you weren’t told about the commission structure, you may have been mis-sold.

The FCA has indicated that compensation may average around £700 per agreement, calculated as approximately 17% of the interest cost paid under the agreement. While this figure is an estimate, and amounts will vary dependent on individual circumstances, it gives a general sense of the scale of redress being considered.

What Should You Do Now?

If you’ve already complained:

If you’ve made a claim with Slater & Gordon, you don’t need to do anything. We’ll continue to work hard on your behalf and ensure you get the compensation you deserve. As your claim is already registered, you may be contacted first and may receive compensation sooner.

If you haven’t yet made a claim:

You can wait for your lender to reach out or register your claim now either directly with them or using our simple and hassle-free service - and we’ll take care of everything for you. We operate on a no win no fee basis, meaning if you’re not successful, we don’t charge you anything.

What If You Don’t Have Your Finance Details?

Many consumers are understandably worried: “I bought my car years ago - how do I know if I’m eligible and I don’t have the paperwork, what do I do?”

Here’s what you need to know:

You don’t need to remember your lender or broker - the FCA will require lenders to proactively identify and contact affected customers.

If your lender no longer has your contact details or record of your agreement (Lenders are only required to keep records on file for 6 years), they won’t be able to get in touch to offer compensation and you’ll then have up to one year from the scheme’s launch (expected in early 2026) to make a claim.

However, navigating this process without legal support can be daunting and complex - especially if your agreement involved complex terms or multiple parties.

You can use our online application tool to locate your agreements quickly and simply – and whilst lenders may not hold records beyond 6 years, we can check further and deeper to ensure agreements are not missed.

Why Use a Law Firm?

While the FCA aims to make the redress scheme straightforward, the reality is that car finance mis-selling cases often involve complex legal and financial nuances. Navigating eligibility, documentation, and disputes can be overwhelming, especially for those unfamiliar with legal processes. That’s where we come in.

• Clarity on Eligibility

Understanding whether you qualify for compensation isn’t always black and white. We’ll carefully review your finance agreements, including any linked products or multiple contracts, and provide clear, honest advice on your eligibility. If your case falls into a grey area, we’ll help you build a strong claim with the right evidence and legal framing.

• Support for Vulnerable Consumers

We ensure that vulnerable clients receive the guidance and advocacy they need to access compensation fairly and confidently. We take extra care to support vulnerable clients, whether due to age, financial hardship, disability, or other circumstances. Our team offers compassionate, guidance to ensure every individual can access redress confidently and without added stress. You won’t be left to figure it out alone.

• Dispute Resolution

If your lender challenges your eligibility or delays their response, we’re prepared to escalate the matter. From formal complaints to litigation, we’ll represent you every step of the way, ensuring your rights are protected and your voice is heard.

• No win no fee

We believe justice should be accessible. That’s why we operate on a no win, no fee basis: if you don’t have a valid claim or your case isn’t successful, you won’t pay a penny. We handle the legwork, paperwork, and legal strategy, so you can focus on what matters.

• Access to older records

Finance providers and brokers are only required to retain customer records for six years. As a result, if you contact your provider directly, any agreements made before 2019 may not be identified or considered eligible. At Slater and Gordon, we’ve invested in comprehensive research and data analysis to uncover all qualifying agreements, ensuring you can claim for all the vehicles you’re entitled to, not just what’s still on file.

Final Thoughts

This is the largest consumer redress scheme since PPI, and it’s designed to be accessible. But accessibility doesn’t always mean simplicity. With millions of agreements, varying lender practices, and evolving FCA guidance, legal support can offer ease, peace of mind and ensure you don’t miss out. If you believe you may be affected and you’d like us to take care of everything for you, simply register your claim here.