Drivers waiting for compensation over mis-sold car finance may have to wait longer than expected. Ongoing legal challenges mean payments are now unlikely to begin before 2027.
Although the delay is disappointing, anyone who thinks they were affected should still make a complaint now. The Financial Conduct Authority (FCA) continues to advise customers to contact their lender directly rather than waiting for the legal process to finish.
Why is compensation being delayed?
The FCA introduced a compensation scheme after courts found that some motor finance customers were treated unfairly because important commission arrangements were not properly disclosed.
However, several organisations have challenged parts of the scheme in the Upper Tribunal. Until those legal cases have been decided, parts of the compensation process have been put on hold. Hearings for car finance claims are expected to take place in late 2026 or early 2027, meaning payments are unlikely before then.
The delay does not mean the compensation scheme has been cancelled. Instead, the FCA is waiting for the legal process to conclude before confirming exactly how the scheme will operate and who will qualify. Once a final decision has been made, the regulator is expected to provide further guidance for both lenders and customers.
Who could be eligible?
According to Claims Bible, the scheme may apply to people who took out a car finance agreement between 2007 and 2024. This includes many Hire Purchase (HP) and Personal Contract Purchase (PCP) agreements where undisclosed commission arrangements may have influenced the cost of borrowing.
Not everyone with car finance will qualify. Whether compensation is paid will depend on the type of agreement, how the finance was arranged and the FCA’s final rules.
Customers who are unsure about the details of their finance agreement can contact their lender for more information. Even if you no longer own the vehicle or have finished making repayments, you may still be able to raise a complaint if you believe you were treated unfairly.
Should you complain now about mis-sold car finance?
Yes. The FCA recommends that customers who believe they may have been affected should complain to their finance provider as soon as possible. Raising a complaint now ensures your concerns are officially recorded while the legal process continues.
When making a complaint, it helps to have details of your finance agreement, including the lender’s name, the approximate date the agreement started and any paperwork you still have. If you’ve misplaced the documents, don’t worry. Your finance provider should still be able to locate your agreement using your personal details.
Making a complaint is usually straightforward and can often be done online, by email or over the phone. Most lenders explain the process on their website.
Be careful of claims companies for PCP car finance
Many claims management firms are advertising their services, but they often charge a percentage of any compensation you receive. The FCA says you can make a complaint yourself for free by contacting your lender directly.
Before signing up with a claims company, it is worth checking whether you really need their help. In many cases, submitting a complaint yourself is just as effective and means you keep any compensation you may eventually receive.
Looking ahead
While the compensation scheme has been delayed, the issue is far from over. Millions of motorists could still be entitled to redress if they were treated unfairly when arranging car finance.
Although the process is taking longer than expected, there is no need to panic. Keeping up to date with announcements from the FCA and responding promptly if your lender contacts you will help ensure you do not miss any important developments.
For now, the best approach is to stay informed, keep copies of any paperwork and submit a complaint if you believe your finance agreement may have been affected. That way, you’ll be ready when the compensation process finally moves forward.
This is sponsored content