# Car finance mis-selling: how to claim compensation

> Cars & motoring · Last updated 29 May 2026

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## Quick answer

If you took out PCP or HP car finance before 28 January 2021 and the dealer earned an undisclosed commission tied to your interest rate, you may be owed redress. Complain to your lender for free — you do not need a claims firm.

Hidden commissions on car finance have become one of the biggest UK consumer-finance stories. This guide explains discretionary commission arrangements, who may be affected, and how to claim through the official, free route rather than paying a claims management company.

## Key facts

- Discretionary commission arrangements (DCAs) let dealers raise your rate to earn more
- The FCA banned DCAs in January 2021 — earlier agreements are the focus of redress
- A 2025 Supreme Court judgment clarified commission disclosure duties
- The FCA confirmed an industry-wide redress scheme for eligible customers
- You can complain directly to your lender for free — claims firms take a cut

## What went wrong

Car finance is usually arranged by the dealer, who acts as a credit broker. Under a discretionary commission arrangement, the lender allowed the dealer to set your interest rate, and the dealer earned more commission the higher the rate. This conflict of interest was rarely explained to customers.

The FCA banned DCAs in January 2021, so agreements taken out before 28 January 2021 are most likely to be in scope for redress.

## Where things stand

After courts examined whether customers were told enough about commission, a Supreme Court judgment in 2025 set out the legal position on disclosure. Following that, the FCA confirmed it would run a structured redress scheme so eligible customers are compensated consistently.

The scheme's precise scope and timing are determined by the FCA, so the position can change — always check gov.uk/complain-financial-service for how to complain before acting.

## How to claim for free

You do not need a claims management company; they take a percentage of any payout. Complain directly to the lender named on your agreement, explaining you believe a discretionary commission was not disclosed.

If the lender rejects your complaint or does not respond in time, you can escalate to the Financial Ombudsman Service for free. Where the FCA redress scheme applies, it is designed to assess eligible customers without you needing to pay anyone.

## Frequently asked questions

### Which agreements are affected?

PCP and HP agreements with a discretionary commission arrangement, generally taken out before 28 January 2021 when the FCA banned DCAs.

### Should I use a claims company?

You don't need to. Complaining to your lender and, if needed, the Financial Ombudsman is free. Claims firms deduct a fee from any compensation.

### How much could I get?

It depends on your agreement and the FCA scheme's methodology. Nothing is guaranteed, so treat any fixed figure promised by a claims firm with caution.

## Primary source

gov.uk/complain-financial-service

## Related

- [Can I claim car finance compensation?](https://moneyguide.org.uk/answers/can-i-claim-car-finance-compensation/)
- [PCP vs HP vs leasing](https://moneyguide.org.uk/compare/pcp-vs-hp-vs-leasing/)

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Independent UK money guidance from [Money Guide](https://moneyguide.org.uk). Information only — not regulated financial advice.