Drivers could get £700 each in landmark FCA compensation scheme – how to claim

If you used car finance to buy a car before November 2024, you might be owed money. The Financial Conduct Authority (FCA) is proposing a new compensation scheme that could see affected drivers receive an average of £700 per claim.

Car finance companies broke the rules at the time by not telling their customers important information when they took out motor finance deals. The FCA says this lack of transparency could have led customers to pay more than they should have and now it wants to put things right.

Nikhil Rathi, chief executive of the FCA, added: “Many motor finance lenders did not comply with the law or the rules. Now we have legal clarity, it’s time their customers get fair compensation. Our scheme aims to be simple for people to use and lenders to implement.”

While the scheme is still being developed, if you think you were affected, now is the time to complain. You can raise a complaint on your own and don’t need to use a claims company which will often take a cut of your compensation.

Who might be eligible for compensation?

You could be eligible for compensation if you bought a car on finance between 6 April 2007 and 1 November 2024.

In many cases, the broker (usually the car dealership) got commission from the lender to arrange the car finance deal for you.

If you weren’t told important details about the deal, you might be eligible for compensation.

It’s worth keeping in mind that the FCA estimates around 44% of all motor finance deals agreed since 2007 will be eligible for compensation under the scheme. So, it’s worth putting in a complaint even if you’re unsure.

How to put in a car finance complaint

Putting in a complaint is pretty simple. That’s why the FCA says you don’t need to use a claims firm. As a reminder, claims companies will take a chunk of your compensation if you decide to use them.

Here’s the process if you want to put in the complaint on your own:

• gather the information you’ll need – include as much information as you can, like your policy number, date of the agreement, address when you took out the agreement, and vehicle number plate
• fill out the template letter on the FCA’s website – you can write your own, but the one the FCA put together has everything you’ll need to include
• submit your letter to your lender – if you’re not sure who they are, you can check old bank statements, speak to the car dealer where you got the car, or check your credit file if you took the agreement out in the last six years

You should receive an acknowledgement within 8 weeks of sending in your complaint. If you don’t, follow up to check the complaint has been received.

The lender doesn’t need to issue a final response to your complaint until after 4 December 2025, but the FCA might extend this deadline to 31 July 2026 for some complaints.

What happens next

If the compensation scheme goes ahead, people who have already complained will likely receive compensation faster. That’s why it’s important to put in your complaint as soon as possible.

Those who haven’t complained will be contacted by their lenders within six months of the scheme starting. They’ll likely need to opt in to have their case reviewed.

If your lender doesn’t get in touch within six months, you’ll have a year from when the compensation scheme is announced to put in your own complaint.

The FCA will be monitoring the scheme to make sure lenders are playing by the rules. But, if you’re unhappy with the outcome of your complaint, you can also take the case to the Financial Ombudsman Service (FOS). The FOS will assess whether the scheme rules have been followed in your case.