How much compensation from mis-sold car finance?

The average payout under the Car Finance Compensation Scheme is expected to be around £700 per agreement, though it can vary depending on how much extra interest you were charged. Some customers may receive higher amounts if multiple loans were affected.

What is the car finance scandal?

The car finance scandal involves lenders and dealers using discretionary commission arrangements that encouraged higher interest rates for borrowers. This led the FCA to create a Car Finance Compensation Scheme to refund customers who were unfairly charged.

How to find out if mis-sold car finance?

You can check your loan paperwork or contact your lender to see if a discretionary commission was applied. If your loan included such a commission, you might qualify for the Car Finance Compensation Scheme once it launches.

What evidence do I need for a mis-selling claim?

Keep your car finance agreement, payment statements, and any emails or letters from your lender. These documents help prove you were charged interest linked to dealer commission, which is key to claiming under the Car Finance Compensation Scheme.

What is the settlement amount for car finance?

The Financial Conduct Authority (FCA) estimates total redress could reach £8.2 billion, with costs possibly rising to £11 billion across UK banks. Individual settlement amounts depend on loan size, term, and how much unfair interest was added.

Car Finance Compensation Scheme illustration showing FCA reviewing car loan documents and refunding UK drivers after mis-selling scandal

Global Market Insights

FCA Car Finance Compensation Scheme Could Cost Banks £11bn After Mis-Selling Scandal

ByRubaisha October 8, 2025October 8, 2025

The Financial Conduct Authority has set out a proposed Car Finance Compensation Scheme that could see lenders paying around £8.2 billion in compensation, with running costs pushing the total to about £11 billion. The scheme covers motor finance agreements from April 2007 to November 2024, and the FCA expects average payouts to be roughly £700 per agreement.