Who is eligible for car finance compensation?

You may be eligible for car finance compensation from your lender if you took out a PCP or hire purchase agreement through a dealer or broker between 6 April 2007 and 1 November 2024, and you weren’t told about certain commission arrangements. That is the scope of the Financial Conduct Authority’s (FCA) redress scheme. The FCA estimates about 12.1 million agreements, roughly 37% of those in the period, are eligible.

This article is about eligibility for the compensation itself. Reclaiming the tax a lender deducts from a payout is a separate step, covered at the end.

Update, 3 October 2026: Since this article was first published, the FCA has confirmed its final scheme rules (30 March 2026). On 2 July 2026 the Upper Tribunal suspended parts of the scheme while it hears legal challenges, now due to be heard on 16–26 February 2027. Lenders are still handling complaints, but they don’t currently have to calculate or pay compensation under the scheme. The FCA expects payments to begin in 2027 if the scheme is upheld. The eligibility rules below are those the FCA has published, and could change depending on the outcome.

The basic conditions

Under the FCA’s rules, your agreement is likely to be in scope if:

• it was a regulated hire purchase or PCP agreement for a car, motorbike, van or campervan
• you took it out between 6 April 2007 and 1 November 2024
• the lender paid commission to the dealer or broker who arranged it
• you weren’t told about at least one of three arrangements (see below)

The start date is when the unfair relationship rules in the Consumer Credit Act began to apply. The end date is when lenders started changing how they disclosed commission after the Court of Appeal’s October 2024 judgment.

It doesn’t matter whether you have paid the agreement off. The scheme reaches back to 2007, so most agreements in scope ended years ago.

The three arrangements

The FCA says an agreement may be unfair if you weren’t clearly told about:

1. A discretionary commission arrangement (DCA). The dealer could set your interest rate, and earned more commission the higher it was. These were banned from 28 January 2021. Our guide to discretionary commission arrangements explains more.
2. A high commission. Commission that was at least 39% of the total cost of credit and at least 10% of the amount borrowed.
3. A contractual tie. Your broker only used one lender, or gave one lender the right of first refusal on your loan. There are exceptions where the link between a manufacturer’s finance company and a franchised dealer was obvious.

What is not covered

The FCA treats some agreements as fair, or outside the scheme, including:

• leasing or personal contract hire (PCH), and ordinary personal loans
• agreements taken out for business purposes
• agreements where the commission was £120 or less (before April 2014) or £150 or less (from April 2014)
• interest-free agreements
• very large loans in the top 0.5% for their year
• cases where the lender can show no better deal was available
• complaints already decided by the Financial Ombudsman Service or a court, or where you have already accepted redress

Does the lender matter?

Eligibility depends on the arrangement behind your agreement, not on the lender’s name. If you’re not sure who your lender was, our guide on how to find your car finance lender may help. You can also browse our lender pages.

How to take part

The FCA’s advice is to complain directly to your lender if you think you were affected. It is free. The FCA warns that using a claims management company or law firm could cost you around 30% of any compensation.

Under the published rules, lenders will contact people who may be owed money. If you aren’t contacted, you can still complain to your lender by 31 August 2027. Those dates were set before the partial suspension of the scheme, so check the FCA’s consumer page for the latest position.

If you’re paid compensation

Compensation under the scheme includes interest. Our article on how much car finance compensation you could get explains how payouts are worked out. The lender usually deducts basic-rate income tax (22% from 6 April 2027) from that interest before paying you.

Many people owe less tax than that, or none, because of the Personal Savings Allowance (£1,000 for basic-rate taxpayers, £500 for higher-rate) or because they’re non-taxpayers. If so, the difference can be reclaimed from HMRC, usually on an R40. When you use our service, we check whether you’re likely to be owed anything, work out the right tax year, prepare and submit the R40 as your agent, and pay you the balance after our fees. Our how it works page explains the process.

Next step

Check the FCA conditions above against your agreement. If you have already received compensation, the next step for the tax is our tax rebate calculator, which shows whether you might be able to reclaim some of it. Results are a general guide only.