Motor finance redress: the current position
Millions of people bought a car on finance between the mid-2000s and 2021. Some of those agreements involved commission arrangements the customer was never told about. This is where things stand, and what you can do without paying anyone.
On this page
What the issue actually is
When you bought a car on finance, the dealer or broker arranging that finance was usually paid a commission by the lender. That in itself is normal and lawful. The question that has driven regulatory action, court cases and a great deal of advertising is narrower: in some arrangements, the person selling you the finance could influence the interest rate you paid, and earned more if that rate was higher.
Where that happened and it was not properly disclosed, there is an argument that the customer paid more than they should have and was not given the information needed to make a fair comparison.
Discretionary commission, in plain English
A discretionary commission arrangement, usually shortened to DCA, is one where the broker had discretion over the customer's interest rate within a range set by the lender. A higher rate produced a larger commission. The Financial Conduct Authority banned this type of arrangement in January 2021.
Two agreements signed on the same day, for the same car, by two people with identical credit profiles, could carry different interest rates purely because of how the finance was sold. That is the heart of the complaint.
| Term you may see | What it means |
|---|---|
| DCA | Discretionary commission arrangement. The broker could influence your rate and earned more on a higher one. |
| PCP | Personal contract purchase. Common car finance with lower monthly payments and a large optional final payment. |
| HP | Hire purchase. You pay in instalments and own the car after the final payment. |
| APR | Annual percentage rate. The yearly cost of borrowing including interest and standard fees. |
| Redress | Putting things right, usually a refund, compensation, or both. |
Where the scheme stands now
The FCA has been working towards an industry-wide approach so that affected consumers could be compensated consistently, rather than outcomes depending on who complained and how well.
As at the date at the top of this page, the FCA has said that parts of that compensation scheme were suspended by the Upper Tribunal on 2 July 2026, pending legal proceedings. In practical terms, lenders do not currently have to calculate or pay compensation under the suspended elements.
Importantly, a suspension of scheme mechanics is not the same as the door closing. You can still complain to your lender, and complaining costs nothing.
Whether you may be affected
You may want to look into this if broadly all of the following apply:
- You bought a vehicle using finance arranged through a dealer or broker.
- The agreement started before 28 January 2021, when the ban took effect.
- You were not told that the person arranging the finance could affect your interest rate, or how their commission worked.
Agreements can be a decade or more old, and many people no longer hold the paperwork. That is not a barrier in itself: lenders hold records, and you can ask them.
If you no longer have the documents
You can ask the lender for a copy of your agreement. You can also make a subject access request, which is free, to obtain the personal data a firm holds about you. If you cannot remember the lender, your old bank statements will usually show the monthly payments and the name behind them.
What to do now, step by step
- Identify the agreement. Find the lender name, approximate start date, and the vehicle if you can.
- Ask the lender for the details if you no longer hold them, including whether a discretionary commission arrangement applied.
- Complain directly to the lender, in writing, explaining that you were not told about the commission arrangement and that you believe you paid more as a result.
- Keep copies of everything, including dates you sent things and any reference numbers you are given.
- Check the current deadlines on the FCA and Financial Ombudsman websites, because time limits do apply and have been subject to change.
- Escalate if you are unhappy with the lender's response and you are eligible, using the free ombudsman route.
You do not need a special form of words. A clear letter saying what happened, why you think it was unfair, and what you would like put right is enough. Our complaints guide sets out a structure you can copy.
Do you need a claims firm?
No. You can complain yourself, for free, and escalate to the Financial Ombudsman Service for free if you are eligible.
Some people still prefer to use a regulated firm, and that is a legitimate choice. If you do, understand that a fee, typically a percentage of any compensation plus VAT, comes out of your money. On a four-figure outcome that difference is substantial. Our checklist before using a claims firm covers the questions worth asking first.
What we are watching next
- The outcome of the legal proceedings behind the current suspension.
- Whether, and in what form, the industry-wide scheme resumes.
- Any revised deadlines for complaints, and how they are communicated.
- Enforcement action against misleading advertising in this sector.
We publish an update whenever one of these moves. You can get those by email.
General information only, not legal or financial advice. Check the current position with the FCA or the Financial Ombudsman Service before acting.