MoneySavingExpert founder Martin Lewis has called it “the biggest payout scheme since PPI.”
The FCA believes around 14 million car loans issued between April 2007 and November 2024 were unfair, potentially worth an average refund of £700 per driver. “This could be worth hundreds – possibly thousands – of pounds for millions of drivers. It’s not one to ignore,” Lewis said.
For years, many dealers and brokers used discretionary commission arrangements (DCAs), where they increased customers’ interest rates to earn more commission. “The more you paid, the more they earned,” and most drivers were unaware – a clear breach of FCA rules.
After reviewing 32 million finance deals, the regulator found around 44% were affected. Its proposed scheme would repay drivers about 17% of the total interest paid. So, if you paid £1,000 in interest, you could get roughly £170 back.
Lewis described the plan as “one of the simplest” ever: “This is important news for anyone who bought a car on Hire Purchase (HP) or Personal Contract Purchase (PCP) finance between 2007 and 2024. The regulator says 14 million were mis-sold and are due a typical payout of £700. It’s by far the easiest redress scheme we’ve ever seen – you may not have to do much at all to get your money.”
The consultation runs until November, with payments expected to begin in early 2026.
Types of mis-selling
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Discretionary Commission Arrangements – dealers raised interest rates to boost commission (around 11.4m loans).
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Tied dealer panels – some dealers falsely claimed to compare lenders (3.2m loans).
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Excessive commissions – dealers earning over 35% of total credit costs (2.9m loans).
What to do now?
If you’ve already complained, your lender will contact you automatically once the scheme starts. If not, Lewis advises complaining now so you’re included early.
You can complain directly to your lender using MoneySavingExpert’s free templates – no claims company needed.
“If they’re not doing anything, they shouldn’t be charging you,” Lewis warned. “You can complain to the Claims Management Ombudsman if they try to take a cut of an automatic payout.”