The key issue is whether a commission was paid to the dealer or broker without being properly explained to you when the finance was arranged. Regulators and courts have been examining historic motor finance commission arrangements, and millions of agreements are now being reviewed.
The FCA has stated that agreements made between April 2007 and November 2024 could potentially fall within the scope of compensation if commission arrangements were not adequately disclosed. Around 14.2 million agreements are being considered as part of the wider review.
Who is eligible for a mis-sold car finance claim?
To be eligible, the vehicle must have been purchased using car finance rather than being bought outright with cash.
In most cases, the finance agreement must have been arranged between April 2007 and November 2024. The claim will usually relate to commission that was paid by the lender to the dealer or broker without being clearly explained to the customer.
The finance agreement should normally be a Hire Purchase (HP) or Personal Contract Purchase (PCP) agreement. These are the types of finance most commonly linked to commission complaints and regulatory investigations. The FCA banned discretionary commission arrangements in 2021 because they created incentives for brokers and dealers to charge higher interest rates.
Commercial vehicles can potentially qualify for PCP reclaims if they were financed through an eligible HP or PCP agreement and the commission was not properly disclosed.
How much could compensation be worth?
The amount of compensation depends on the individual agreement. Factors such as the size of the loan, the interest rate and the level of commission involved can all affect the final figure.
Current estimates suggest that the average payout could be around £700 per agreement, although some people may receive more and others less. Industry estimates suggest total compensation across the UK could run into several billion pounds.
The exact amount will not be the same for everyone. Some agreements may involve relatively small commission payments, while others could result in significantly larger refunds if customers paid higher interest because of the commission arrangement.
Does it matter if I used finance or a business loan?
Yes, it can matter.
The strongest claims are generally linked to regulated motor finance agreements such as HP and PCP. If your commercial vehicle was funded through one of these agreements, you may have grounds for a claim if commission was not properly disclosed.
A standard business loan is different. Business lending is often regulated in a different way and may not fall within the same compensation framework as motor finance agreements. Whether an unsecured business loan qualifies will depend on the circumstances, the type of borrower and the finance agreement that was used.
If you are unsure, it is worth checking your paperwork to see whether the vehicle was financed through HP, PCP or another type of borrowing.
What if the vehicle has been sold or the finance has been paid off?
Many people assume they cannot claim if they no longer own the vehicle. That is not usually the case.
You may still be able to make a claim if the finance agreement has already ended or if the vehicle has been sold. The important factor is whether the finance was mis-sold at the time it was arranged.
Likewise, paying off the agreement in full does not automatically prevent a claim. A large number of potential claims relate to finance agreements that finished years ago.
As long as the agreement falls within the relevant period and meets the eligibility criteria, it may still be worth investigating.
Can I make a claim myself?
Yes. You do not have to use a claims management company or a third-party service.
Many lenders allow customers to submit complaints directly, and consumers can also take complaints to the Financial Ombudsman Service if necessary. The FCA has indicated that customers can pursue complaints themselves without paying a third party to act on their behalf.
Some claims companies offer to handle the process for you, but they usually charge a fee or take a percentage of any compensation you receive. This means part of your payout could be deducted.
For many people, making a claim directly is a straightforward option and allows them to keep 100% of any compensation awarded.
Final Thoughts
If you purchased a commercial vehicle using HP or PCP finance between April 2007 and November 2024, and the commission arrangement was not properly disclosed, you may be eligible for compensation. It does not necessarily matter if the vehicle has been sold or if the finance has already been paid off. While claims companies can assist, you can usually make a claim yourself and avoid paying fees. With millions of agreements under review and average compensation estimates of around £700, it may be worth checking whether your finance agreement could qualify.